Case Name: John Belcher vs. John F. Costello
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1877-03-06
Citations: 122 Mass. 189
Docket Number: 
Parties: John Belcher vs. John F. Costello.
Judges: 
Reporter: Massachusetts Reports
Volume: 122
Pages: 189–191

Head Matter:
John Belcher vs. John F. Costello.
Suffolk.
Nov. 15, 1876.
March 6, 1877.
Ames & Lobd, JJ., absent.
In an action for deceit, it appeared that the plaintiff had received, as collateral security for a balance due upon goods sold by him to the defendant, certain notes' of third persons, and also a mortgage note, in which the defendant was named as payee, as collateral security for the same, but the mortgage was not assigned or the mortgage note indorsed. The plaintiff offered evidence that the defendant represented that the land covered by the mortgage had been sold by a third person for a certain sum, which representation was false and fraudulent. Held, that the evidence was admissible; and that the fact that the mortgage note was not indorsed or the mortgage assigned was immaterial.
In an action for deceit, it appeared that the defendant falsely represented that the makers of certain notes, taken by the plaintiff as collateral security, were good. Held, that the Gen. Sts. c. 105, § 4, providing that a representation concerning the credit of any other person must be in writing, did not apply. Held, also, that it was erroneous to instruct the jury, that if the defendant “ intended to represent and give the plaintiff to understand that the makers of the notes were in good pecuniary circumstances, and able to pay them, such a representation would be of a fact, and, if false and fraudulent, would be actionable."
Tort for deceit. At the trial in the Superior Court, before Pitman, J., the jury found for the plaintiff; and the defendant alleged exceptions, which, so far as material, appear in the opinion.
A. A. Ranney, (H. E. Swasey with him,) for the defendant.
G. E. Smith, for the plaintiff.

Opinion:
Endicott, J.
The defendant, having bought merchandise of the plaintiff, and paid a portion of the purchase money in cash, gave as collateral security for the balance certain notes of third persons, one of which was secured by a mortgage of real estate. The plaintiff offered evidence that the defendant represented that the notes and the persons who made them were good, and that the land covered by the mortgage had been gold for $2600. It appears in the papers that this alleged sale was made by one Lowell to Currier, and that Currier gave back to Lowell the mortgage in question, which was afterwards assigned to the defendant. The statement was not in regard to the price paid by the defendant, but by a third person, for the property, and comes clearly within the rule laid down in Medbury v. Watson, 6 Met. 246, 259. It was therefore competent for the plaintiff to prove that the representation was false and fraudulent. It was the representation of a particular fact in regard to the value of collateral security, upon which the plaintiff might rely, and, upon discovering it to be false and fraudulent, could maintain his action. Manning v. Albee, 11 Allen, 520. It is immaterial that the mortgage note was not indorsed, or the mortgage assigned by the defendant, when taken as collateral security by the plaintiff. The note was payable to the order of Lowell, and indorsed by him. The plaintiff took a good title to it upon delivery, and the defendant could have been compelled in equity to foreclose or assign the mortgage for the benefit of the plaintiff. Parsons v. Welles, 17 Mass. 419, 424. Crane v. March, 4 Pick. 131. Young v. Miller, 6 Gray, 152, 156. The rulings of the presiding judge on this point were correct.
The remaining exception relates to the representations that the notes and the parties who made them were good. The provisions of the Gen. Sts. c. 105, § 4, have no application to this case. They apply only when the purpose of the representation is to enable a third person to obtain credit, in which case they must be in writing. Medbury v. Watson, ubi supra. McKinney v. Whiting, 8 Allen, 207. It was correctly stated to the jury that expressions of opinion and judgment would not sustain an action for false representation, but that the representation must be of some fact, past or existing; and that if the defendant, when he said the notes were good, merely intended to give an opinion as to their market value, such representation is not actionable. But the presiding judge added, that it was otherwise if the defendant intended to represent, and give the plaintiff to understand that the makers of the notes were in good pecuniary circumstances, and able to pay them; and that such representation would be of a fact, and, if false and fraudulent, would be actionable. The representation proved, as stated in the bill of exceptions, was that the parties were good. This, taken by itself, is not the statement of a fact, but the expression of an opinion merely. The learned judge therefore erred in ruling, as matter of law, that the representation that a party is in good pecuniary circumstances and able to pay the notes, which is equivalent to a representation that he is good, is necessarily the representation of a fact. Exceptions sustained.