#### *Eliza*Y. *K. Turnbull*v. *T. N. Gadsden.*

Charleston,

Jan’y. 1848.

If a person make a representation to another going (o deal in a matter of interest, upon the faith of that representation, the former shall malte that representation good if he knew it to be false, or if he did not know whether it was true or false. And it is a principle of universal law, that fraud and damage coupled together, entitle the injured party to relief in any court of justice.

In any cases where fraudulent misrepresentations have induced a contract, a right of action arises immediately to set it aside, and to recover the damage which may have resulted therefrom.

*Before*Caldwell, Ch. *at*Charleston, *February Sittings,*1847.

The bill stated that plaintiff, being desirous, in the early part of 1842, to invest a small sum of money, requested her father to inquire for a good investment; he applied of Thomas N. Gadsden, a broker, if he had a bond to dispose of, and informed him that the plaintiff would be willing to invest $1000 in a bond, provided it was a good and legal bond, and well secured by mortgage. Defendant answered, that he would endeavor to find such a bond, and that plaintiff’s father might rely upon him that he would recommend none to him, unless it was perfectly safe. That defendant, as plaintiff believes, saw Roger Hasset, who was in very great want of money, and whose circumstances were well known to defendant, who undertook, as plaintiff has heard and believes, for $55, to procure for the said Roger Hasset $1000 by the sale of his bond : that he then informed plaintiff’s father that he had found an unexceptionable investment for plaintiff’s money, and showed him a bond of Roger Hasset, dated 18th May 1842, conditioned for the payment of $1100 in one year, secured by mortgage, of the same date, of a house in Cumberland-street, and offered to sell it to him at $1000 — plaintiff’s father being assured by defendant, in the strongest terms, that the property mortgaged was clear, and of much greater value than the amount called for by the bond, agreed to the terms proposed, and paid to defendant for the bond $1000, the money of plaintiff. That the property mortgaged *to secure the*bond was not clear, as defendant asserted, but, as he well knew, was then mortgaged by deed, dated 5th February 1839, to the City Council of Charleston, for the purchase money to the amount of $3187 50, which was as much as it was worth. That plaintiff knew nothing of the prior mortgage, till after the money was paid and the papers delivered, and that she then, by her father and other friends, endeavored to obtain from defendant a return of her money, which ought to have been returned immediately, seeing that his assurances, that the property was clear, had led her to deal with him for the *15bond. But instead of returning the money, the defendant asserted that the debt was well secured, and that plaintiff was alarmed without cause; that Hasset was a responsible son, and had other property and was able to pay his debts, and only wanted the money to defray the expenses of a visit to Ireland, which would be a source of gain to him from the profit he would make on the importation of linens, and that the mortgaged property itself was worth $7000.

That all these assurances of defendant were untrue, and known to himself to be so, except that Hasset did, in fact, own other property, though all he owned was mortgaged for the purchase money; but plaintiff, ignorant of the extent of the deception practised upon her, so far relied on the assurances of the defendant, as to wait for the affairs of Hasset to be extricated, in expectation of her money. That on the 9th of October 1843, the City Council filed their bill to foreclose their mortgage and made plaintiff a party, and in pursuance of a decree of this Court, made in the cause on the 22d of February 1844, the property mortgaged to the city was directed to be sold, for one-fourth cash, and a credit of'one, two and three years for the residue; and the plaintiff’s debt to be paid out of the residue of the purchase money after discharging the City’s debt and costs. That the property mortgaged to the city included another lot besides the lot mortgaged to the plaintiff; that on 24th June 1844, Mr. Gray, in pursuance of the order' of the Court, made the sale above directed, and defendant himself became the purchaser of the lot mortgaged to plaintiff, for $3,200; and the other lot was purchased at $800. And the proceeds of both lots, after deducting costs and expenses, barely paid the city debt; and plaintiff’s mortgage being exhausted proved of no value; that plaintiff has received neither principal nor interest, except a payment of $266 made by Mr. Gray on the 6th of April last, to her as a creditor under the decree of 28th of February 1844, of the said Roger Hasset, from the residue of the sale of his remaining property, which payment being less than the amount of the interest then due, leaves the whole of the principal unsatisfied. And that Roger Hasset is insolvent and without property of any kind. Defendant purchased the mortgaged property at a price far below its value, according to his own. representations of the value, to plaintiff’s agent. The bill prays that defendant may account to plaintiff as the seller of the said bond for the failure of consideration, and for the loss sustained by her in consequence of his false representations of the responsibility of Roger Hasset, and the title to the mortgaged property, and make good to plaintiff the representations which he knowingly made without warrant, to induce her to part from her money.

The answer of the defendant Thomas N. Gadsden admits, *16that on 9th of May 1842, James Turnbull came to defendant, who is an auctioneer and broker, and represented that he was desirous of investing a sum of money, amounting to about $1000, which belonged to his daughter the plaintiff, in a good bond secured by a mortgage of real estate, and the defendant did undertake, as a broker, to find an investment for him, but denies that he ever told James Turnbull that he might rely upon him the defendant, that the bond he might procure would prove perfectly *safe, or*in any other manner led him to suppose he the defendant would warrant the said bond, or become responsible for the ultimate payment of the same. That Roger Hasset had previously informed him that he was desirous of procuring a loan of money upon his bond, to be secured by a mortgage of a lot in Cumberland street in the city of Charleston, of which he was the owner in fee, and that defendant did exhibit to James Turnbull, Hassett’s bond dated 18th May 1842, conditioned for the payment of $1100 in a year, and secured by a mortgage of said lot, and offered on his part to sell the same to him for $1000; that he agreed to the terms and became the purchaser of the bond and mortgage, and paid for the same $1000, which sum of money was paid over by defendant to Roger Hasset, less the sum of $45, which Hasset agreed to allow the defendant for his commissions for the negotiation. Defendant expressly denies that he ever assured James Tnrnbull, that the property mortgaged, was clear of incumbrances, or that he knew or had any reasons whatever to suspect or believe that there was any prior-mortgage or lien on the same to the City Council of Charleston, as alleged in the bill, or to any other person or persons whomsoever; he denies that he gave him any assurance as to the value of the premises mortgaged, but leit the value, as well as the title to the same, entirely to the judgment of the said James Turnbull. Defendant admits that James Turnbull did afterwards complain to him that he had discovered a prior mortgage on the said premises to the City Council of Charleston, and endeavored to obtain from him the defendant, a-return of the $1000, but defendant told him in reply, that he was not aware of there being any prior mortgage on the lot, and if there was, he the defendant was not responsible for it; he denies that he asserted to him, or to any other person, that the debt was well secured, or that he or the plaintiff was alarmed without cause, or that Hasset was a responsible person and able to pay his debts out of his other property, or that he gave any assurances whatever concerning the visit of Hasset to Ireland, or the profits he expected from the importation of linens, or that the mortgage property itself was worth $7000, although defendant believes, and if it be material, is ready to prove, that the property was at the time worth more than the amount due upon the mortgage to the plaintiff *17and City Council. Defendant avers, that he acted only as a broker, and in good faith between the parties, and that he practised no deception on the plaintiff, and made no misrepresentations whereby she has sustained damage. That he believes it is true, that a bill to foreclose their mortgage on the lot of land, was filed by the City Council at the time and in the manner alleged, and that the property was sold by Mr. Gray, as sot forth; admits that he became the purchaser of the lot at $3,200, and that he attended that sale, as he is in the habit of attending other sales of the Master; that he bought the lot openly and fairly, and was at that price the highest bidder for the same; and that he has been informed and believes, that the proceeds of the sale were applied first to the satisfaction of the debt to the City Council, but whether there was any surplus remaining thereafter he does not know and cannot say. He has been informed that a payment has been made to plaintiff by Mr. Gray, on account of the*bond and mortgage, but is not informed of the amount. Defendant insists that if the plaintiff ever had any cause of suit against him for the matters charged in the bill, the same did not accrue within four years next before the plaintiff filed her bill, or commenced her suit, or served this defendant with process to appear and answer thereto; and therefore such demand, action, or 'suit, if at all it could previously have been, cannot now, within the meaning of the statute for the limitation of actions, be maintained and pursued, and prays that he may be allowed the benefit of this defence, as if the same had been specially pleaded.

,6 yes_ 182_

Upon the case as made by the bill, answer, <fcc., his Honor delivered his decree.

Caldwell, Ch.

There are two questions involved in this case: 1st. Has the Court of Equity jurisdiction? 2d. Is the plaintiff’s claim against the defendant barred by the statute of limitations ? The statements and charges of the bill make a case to which a demurrer could not be sustained, and the evidence is such a chain of circumstances, as establishes the truth of every material allegation. One of the largest classes of cases in which Equity grants relief is where there has been misrepresentation. In *Evans v.*Brickwell, it was said to be a very old head of Equity, that if a representation is made to another person going to deal in a matter of interest, upon the faith of that representation, the former shall make that representation good, if he knew it to be false; and in *Bacon*v. Brunson, Chancellor Kent, quoting this case, says, “ there is no dispute about this doctrine; it is a principle of universal law ; fraud and damage coupled together, entitle the injured party to relief in any Court of Justice.”

It is necessary that the misrepresentation should be in a matter of substance important to the interests of the plain*18tiff, and that the damage should not be indefinite or contin-geutj but result directly frcrm the misrepresentations; but it is not essential that the defendant should derive a benefit from it. The plaintiff’s claim is strengthened by the circum-stances of the unlimited trust and confidence which she reposed in his truth and fidelity; he was employed to invest her money in a good bond, secured by a mortgage of real es-tate’ an<^ ^íe any other agent who is retained to perform cer-£am work for hire, he was bound to exercise the skill and dil-igence proportioned to the employment.

Uuss 1 P tors Brokers, 35.

When a broker is employed to negotiate bills of exchange, he is bound to acquaint himself with all the proceedings which are necessary by law'for the *protection of the*rights of his principal, and to adopt such proceedings without any unnecessary delay: if employed to procure insurance, he must take care that the underwriters are persons in good credit at the time of the insurance; otherwise, he must bear the loss arising from their insolvency. Had the instructions of the principal been to take a bond with personal sureties, it would have been a matter of discretion, and there might have been a ¿mere error in judgment; but here, there could, be no mistake ■as to the security required, or the certainty of its being sufficient, if the agent had done his duty; the defendant’s course in this negotiation was so plain and palpable, that his neglect becomes so gross, as to amount to fraud, which he has not palliated by showing that he made an inquiry of even one person, whether Hasset was good or not. Even when warned by the apprehensions of plaintiff’s agent, he repelled with contempt, the charge of the bond and mortgage being insufficiently secured, and persisted to the last in assuring the plaintiff that her money was secure. Whether the defendant in misrepresenting the fact of Hasset’s bond and mortgage being ;good, knew it to be false, or whether he made the assertion without knowing whether it was true or false, is *immaterial;*for the rule of law and morals is identical, that, the affirmation of a fact which one does *not know*or *believe to be true,*is equally unjustifiable as the affirmation of what he knows .to be positively false,

There is no rule of law or equity that exonerates a broker from the obligations of due diligence, whether he be considered as the agent of one of the parties or of both. If he be considered as the agent of Hasset, he is supposed to know the encumbrances on the property of his principal, and to speak for him, and ought to be bound by the representations that he made, for it was within his power to withhold the money until Hasset could give him proof of his estate being unincum-bered; but the circumstances indicate that the defendant was well acquainted with Hasset’s condition, and was not dealing with one to whom he was a stranger. It was urged on *19the part of defendant, that it was not his line of business to make contracts, and it could not be expected that a broker would be competent to investigate titles and take bonds and mortgages. If one undertakes an employment for which he is unfit, and in the execution of the business receives a benefit himself and occasions a loss to his employer, he cannot shelter himself behind his ignorance or incapacity, from the responsibility that, he has assumed, and must be held answerable for the consequences, especially where he had acted *mala fide.*

garn and 636.

The second question involves two points: — 1st. Had the Court of Law concurrent jurisdiction of this case? 2d. When did the right of action arise'? There are many cases of misrepresentation, of which the Courts of Law and Equity have concurrent jurisdiction. It has been said, that the great case of *Pasley*v. Freeman, which was tried at law, could have been maintained in Equity, on the ground of fraud and deceit in the defendant and damages to the plaintiff. At common law it is a familiar principle that fraud accompanied with damage is a good cause of action, and the proper remedy is by an action on the case — the plaintiff might therefore have brought her action on the case against the defendant at law— she was not bound to wait until the affairs of Hasset were wound up by his other creditors. This case cannot be put upon the footing of a guaranty, where the remedy against the original obligor is first to be exhausted before suit can be brought against the guarantor — here the misrepresentation deceives the plaintiff, defrauds her of her money and deprives her of the adequate means of recovering it — the injury is therefore complete at once, and needs no future or further contingencies to its consummation.

In *Short*v. McCarley, the defendant was employed to make a search at the Bank of England, to ascertain whether certain stock was standing m the name of certain persons ; he omitted to search, and although his neglect was not discovered by plaintiff until within six years, the statute of limitations was held a bar.

In *Whitehead*v. Howard, the defendant, in 1808, promised to invest plaintiff’s money for him on good security by way of annuity; part of the security proposed by defendant consisted of some copyhold premises supposed to belong to one Alston ; the defendant never inspected the rolls of the manor in which the copy-hold was situate; that though in fact Alston possessed uo such copy-hold, the plaintiff’s money was paid over to Alston, who granted an annuity for it, which was paid by the hands of the defendant till 1814, when Alston became bankrupt; that at the time of the transaction, the plaintiff’s two sons were Clerks in defendant’s office, were in some degree consulted by the plaintiff, and might if they had thought fit, have inspected the rolls of the manor; that upon *20Alston’s bankruptcy and *the state of the security being dis-coverey^*Gibbs, the defendant’s managing clerk, promised the should be paid, which promise was afterwards recog-nised and confirmed by the defendant. Defendant pleaded the general issue and statute of limitations; and the Court held that the action could not be sustained, and that the defendant’s liability was barred by the statute of limitation. In *Howell*v. Young, (which was an action on the case against an attorney for negligence,) the declaration stated that the plaintiff retained the defendant to see if a certain security were good; that he accepted *the*retainer and *neglected his duty,*and *represented the security to be good;*the plaintiff advanced his money and the security was bad — by means of which he lost the interest. It was *held*that the gist of the action was the negligence, and the statute oflimitations runs from the time of the negligence, and not from the time of the loss of the interest.

3 V. &B. 372.

2Car*|>ayn0

This case cannot be considered as a technical continuing trust, nor as belonging to that class of cases which is exclusively remedial in equity. Her right of action arose from Gadsden’s misrepresentations of the security of the bond and mortgage, and she was not bound to wait until she could recover the one or foreclose the other, before she could prosecute her claim against tho defendant for the deceit, but like all cases of fraud, a right of action arose immediately, to set aside the contract and to recover from the defendant the money of which she had been defrauded. The moment the misrepresentation was discovered and the insecurity of the plaintiff’s bond and mortgage ascertained, the cause of action was complete ; and it would have been competent for her, in a suit at law against the defendant, to have proved the extent of her damages at any time, independently of the proceedings of other creditors of Hasset: if any other rule were adopted, every action on the case, for giving false representations of credit, would have to be preceded by a suit against the insolvent who had been recommended and had received the goods, before suit could be sustained against the responsible party who had committed the fraud.

It is ordered and decreed, that the plea of the statute of limitations be sustained and the bill be dismissed.

The complainant appealed, and insisted that the statute of limitations does not bar her remedy against the defendant: but that he is bound to make good his fraudulent representations : and a decree should accordingly be made.

PetigRü & Lesesne, complainant’s Solicitors.

Caldwell, Ch.

This Court concurs in the result of the Circuit decree, and the appeal is therefore dismissed and the Circuit decree is affirmed.

The whole Court concurred.

*Decree affirmed.*