GA Code § 23-2-53 (2021)
2021 Georgia Code|Title 23 - Equity|Chapter 2 - Grounds for Equitable Relief|Article 3 - Fraud|§ 23-2-53. Suppression of Fact as Fraud

 Suppression of a material fact which a party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case.   (Orig. Code 1863, § 3106; Code 1868, § 3118; Code 1873, § 3175; Code 1882, § 3175; Civil Code 1895, § 4027; Civil Code 1910, § 4624; Code 1933, § 37-704.)   Law reviews.   - For article, "Common Fact Patterns of Stock Broker Fraud and Misconduct," see 7 Ga. St. B.J. 14 (2002). For note as to recovery by home buyer for fraud in passive concealment by vendor, see 29 Mercer L. Rev. 323 (1977).   JUDICIAL DECISIONS    Suppression of a fact material to be known, and which the party is under an obligation to communicate, constitutes fraud and the obligation to communicate may arise from the particular circumstances of the case. Brittain Bros. Co. v. Davis, 174 Ga. 1, 161 S.E. 841 (1931).    Suppression of the truth is not a fraud unless used as a means of deceiving another; no man is compelled to break silence and speak, unless there is an obligation resting upon him to speak. Georgia Real Estate Comm'n v. Brown, 152 Ga. App. 323, 262 S.E.2d 596 (1979).    Suppression of the truth constitutes fraud where there is an intentional concealment of a fact for the purpose of obtaining an advantage or a benefit. Georgia Real Estate Comm'n v. Brown, 152 Ga. App. 323, 262 S.E.2d 596 (1979).   Fraud in insurance dealings.    - When the insured furnished false evidence which was relied upon by the insurance company in reinstating insurance policies he was guilty of fraud in law which would avoid the policy, whether he was in good or bad faith and whether he intended to deceive or not. New York Life Ins. Co. v. Odom, 93 F.2d 641 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948, 82 L. Ed. 1532 (1938); Life & Cas. Ins. Co. v. Davis, 62 Ga. App. 832, 10 S.E.2d 129 (1940).   Fraud committed by insurance company.    - When the plaintiff, a woman so limited in education that she could not read and understand the meaning and effect of the instrument which she signed, surrendered, upon request of the manager of defendant insurance company, policy in which she was named beneficiary, premium receipt book and record of payments on the policy sued on, and was presented for signature and signed, a receipt or release from liability in consideration of the payment to her of $3.30, whereas the policy provided for payment of $51.75 upon death of the insured, it was a fraud upon plaintiff, under the circumstances, not to disclose to her the contents of the paper which defendant, through its manager requested her to sign. Industrial Life & Health Ins. Co. v. Johnson, 62 Ga. App. 630, 9 S.E.2d 121 (1940).   Rescission of real estate purchase contract.    - In an action by a purchaser to rescind a contract for the purchase of real estate on the ground of the fraudulent concealment of a material fact, where the allegations of fact were insufficient to show actual fraud, in that there was no duty to communicate the material fact in question, which the purchaser could have discovered by exercising ordinary care, and there was no misrepresentations, no cause of action was stated. Kirven v. Blackett, 208 Ga. 178, 65 S.E.2d 791 (1951).    This section expressly goes beyond the strict fiduciary relations of the parties. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).    When persons sustain towards another a relation of trust and confidence, their silence when they ought to speak, or their failure to disclose what they ought to disclose, is so much a fraud in law as an actual affirmative false representation; mere silence on their part as to a cause, the facts giving rise to which it is their duty to disclose, amounts to a fraudulent concealment. Georgia Real Estate Comm'n v. Brown, 152 Ga. App. 323, 262 S.E.2d 596 (1979).   Constructive fraud "contrary to good conscience" requirement.    - When there is no evidence of suppression, misrepresentation, concealment, or bad faith so as to impute moral guilt, the mere omission of a matter from a document coupled with the failure to reveal the omission can hardly be even constructive fraud unless it is "contrary to good conscience." Rhodes v. Perimeter Properties, Inc., 187 Ga. App. 55, 369 S.E.2d 332 (1988).   No obligation to disclose information equally available to both parties in arms-length business or contractual relationship.    - While concealment of material facts may amount to fraud when the concealment is of intrinsic qualities the other party could not discover by the exercise of ordinary care, in an arms-length business or contractual relationship there is no obligation to disclose information which is equally available to both parties. Under such circumstances, actionable fraud cannot be shown unless the plaintiff exercised due care to discover the fraud. Southern Intermodal Logistics, Inc. v. Smith & Kelly Co., 190 Ga. App. 584, 379 S.E.2d 612 (1989).    There existed no confidential relationship between business and contractor who contracted on virtually equal terms and at arms-length, and where business elected to employ a separate contractor thereby electing not to rely solely on the first contractor. American Honda Motor Co. v. Williams & Assocs., 208 Ga. App. 636, 431 S.E.2d 437 (1993).   Attorney for opposing party had no duty to advise of legal rights.    - In taxpayers' claim against a purchaser's assignee for rescission of a redemption agreement, the facts did not support rescission. The assignee's attorney did not defraud them or conceal any facts, but advised them to hire an attorney, and any failure to advise them of their legal rights was an opinion as to a matter of law and not a material fact. Boyd v. JohnGalt Holdings, LLC, 294 Ga. 640, 755 S.E.2d 675 (2014).    A buyer-seller relationship does not require that the buyer disclose information regarding the value of the seller's property. Butts v. Southern Clays, Inc., 215 Ga. App. 110, 450 S.E.2d 244 (1994).   Responsibilities of real estate brokers.    - Listing broker was not obligated to communicate to the couple that the home they purchased was slightly smaller in size than the subdivision's model home the couple wanted duplicated on their lot as the purchase contract plainly stated that the couple had no right to rely on the listing broker as the couple's broker, that the couple had no confidential relationship with the listing broker, and that the couple was solely responsible for protecting the couple's own interests, as the couple was required to exercise due diligence before it could rely on the listing broker's representations and the couple did not do so. Middleton v. Troy Young Realty, Inc., 257 Ga. App. 771, 572 S.E.2d 334 (2002).    Potential buyer did not have a viable common law cause of action for fraud and deceit against a real estate broker and a real estate agent because, as set forth in O.C.G.A. § 10-6A-4(a), no confidential or fiduciary relationship was created between the buyer and the broker and the agent as a matter of law. Harrouk v. Fierman, 291 Ga. App. 818, 662 S.E.2d 892 (2008).   Failure to disclose decision bypassing real estate agent to avoid paying a commission was fraud.    - Trial court erred in granting a directed verdict on a real estate agent's fraud claim against an owner for failing to disclose the owner's decision to directly engage a contractor presented to it by the agent, bypassing its commission agreement with the agent. The economic loss rule did not bar the claim. ASC Constr. Equip. USA, Inc. v. City Commer. Real Estate, Inc., 303 Ga. App. 309, 693 S.E.2d 559 (2010).   Failure of insured not to supply health information.    - The failure of the insured to supply information as to health problems when no inquiry is made by the insurer or its agents and neither the certificate or master policy of insurance inform the insured that certain illnesses are not covered will not raise a defense of fraud or material misrepresentation in a suit on a credit life insurance policy. Block v. Voyager Life Ins. Co., 251 Ga. 162, 303 S.E.2d 742 (1983).   No recovery for failure to disclose when no harm shown.   - In a dispute between a concert booking agent and concert venue owners, the agent's fraud claim arising out of the owners' alleged promises to renew the agreement failed because the agent failed to show that the promises caused the agent harm. There was no evidence suggesting that the owners failed to disclose the owners' decision to terminate the agreement. Lucas Entm't Grp., LLC v. Robert W. Woodruff Arts Ctr., Inc., 720 Fed. Appx. 512 (11th Cir. 2017)(Unpublished).   Expert testimony was required.    - Trial court did not err by granting a doctor summary judgment in a medical fraud suit because the suing patient failed to present expert testimony as to whether the pre-surgery x-rays should have put a doctor on notice of a deformity as such a determination was not within a layperson's common understanding and experience and, instead, required expert testimony. Johnson v. Johnson, 323 Ga. App. 836, 747 S.E.2d 518 (2013).   Land purchaser's duty to disclose mineral deposit.    - The mere fact that purchaser of land alone had knowledge of a large kaolin deposit does not impose a duty on the purchaser to reveal this information to sellers. One's duty to disclose would arise from the confidential relations of the parties or from the particular circumstances of the case. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548 (M.D. Ga. 1992); Butts v. Southern Clays, Inc., 215 Ga. App. 110, 450 S.E.2d 244 (1994).   Withholding information about excavation site.   - Withheld information appeared to have been material to a contractor's ability to prepare a responsible bid for a contract to excavate a site, where the withheld reports contained information about the presence of excessive moisture at the site and stated that the standard proctor test should be used rather than the more difficult modified proctor test required by the specifications, and that both the excavations and the fill should be dried before compaction. Such activity would have undoubtedly increased the cost of performance of the contract. Pinkerton & Laws Co. v. Roadway Express, Inc., 650 F. Supp. 1138 (N.D. Ga. 1986).    Evidence was sufficient to create an issue for jury determination as to whether real estate agent fraudulently failed to inform seller that documents executed at closing did not grant him a security interest in purchaser's property, as seller had requested. Welch v. Holley, 191 Ga. App. 532, 382 S.E.2d 128 (1989).    Trial court erred in granting summary judgment to the co-executors in a constructive fraud or conspiracy claim filed by the beneficiaries of an estate because it was necessary for a jury to decide whether the co-executors committed constructive fraud or engaged in a conspiracy. Bloodworth v. Bloodworth, 260 Ga. App. 466, 579 S.E.2d 858 (2003).   Nondisclosure.    - Nondisclosure may provide the basis for constructive fraud where a party is under an obligation to communicate. First Union Nat'l Bank v. Davies-Elliot, Inc., 207 Ga. App. 791, 429 S.E.2d 161 (1993).    Even though a bank had a duty to notify its customer of a change in its signature verification procedures, where there was no evidence that the bank refrained from informing its customers in order to induce them to take or refrain from taking any certain action, there was no showing of constructive fraud. Eason Publications, Inc. v. Nationsbank, 217 Ga. App. 726, 458 S.E.2d 899 (1995).   Where a debtor failed to disclose to a creditor that business assets were no longer available to secure a loan upon its renewal, the debt was not dischargeable in bankruptcy because the renewal was obtained by false pretenses. Suntrust Bank v. Brandon (In re Brandon), 297 Bankr. 308 (Bankr. S.D. Ga. 2002).    Fraud may exist as much in intentional concealment of material facts as in false statements in regard to facts; one is as fraudulent as the other if it is used as a means of deceiving the opposite party. It was error to grant summary judgment where the facts indicated a deliberate concealment of assets with the possible intent to deprive a creditor of those assets. Miller v. Lomax, 266 Ga. App. 93, 596 S.E.2d 232 (2004).    Jury was properly instructed on fraud under O.C.G.A. § 23-2-53 because the obligation to communicate to a beneficiary by a trustee was not dictated by the existence of a fiduciary relationship and viable claims for constructive fraud had long been recognized in the absence of a fiduciary relationship under the particular circumstances of the case clause. McSweeney v. Kahn, F.3d (11th Cir. Sept. 10, 2009).    Since the plaintiffs alleged that at the time the plaintiffs purchased the plaintiffs' vehicles, the manufacturer and the distributor failed to disclose to the plaintiffs or to the public the fact that there were underlying safety defects with the gasoline tanks in the models that the plaintiffs purchased, the plaintiffs plausibly alleged that the defendants omitted a material fact that the defendants had a duty to disclose under O.C.G.A. § 23-2-53 as the defects in the gasoline tanks were intrinsic qualities that could not have been discovered through the exercise of ordinary prudence and caution. McCabe v. Daimler AG, 948 F. Supp. 2d 1347 (N.D. Ga. 2013).   Trust's account statement failed to disclose straw man transaction with trustee.    - Trust's account statement reflecting a sale of the principal asset of the trust was not a "report" because there was insufficient disclosure of the nature of the transaction to trigger the running of the shortened two-year limitation period under O.C.G.A. § 53-12-307(a). Smith v. SunTrust Bank, 325 Ga. App. 531, 754 S.E.2d 117 (2014).   Required elements of fraud not proven.   - In an action by buyers of a distributorship of heavy equipment against the manufacturer of the distributorship's main product line, based on concealment of a pending joint venture, the buyers failed to prove the required elements of fraud. Williams v. Dresser Indus., Inc., 120 F.3d 1163 (11th Cir. 1997).   Prima facie case established.   - District court found that land vendors presented a prima facie case of intentional fraudulent concealment concerning valuable mineral deposits against land purchasers. McLendon v. Georgia Kaolin Co., 837 F. Supp. 1231 (M.D. Ga. 1993).    A confidential and fiduciary relationship between brothers was not presumed when one of the brothers was aware that the other embezzled substantial amounts of money from their family business and that particular misconduct was the very subject under investigation. Wender & Roberts, Inc. v. Wender, 238 Ga. App. 355, 518 S.E.2d 154 (1999).   Negotiation of stock purchase agreement.    - Although the defendants were directors of a corporation, they did not have a fiduciary duty to the plaintiff at the time of the negotiation of a stock purchase agreement; instead, the agreement was an arm's length transaction between persons experienced in the mining business and, therefore, there was no violation of O.C.G.A. § 23-2-53. Bogle v. Bragg, 248 Ga. App. 632, 548 S.E.2d 396 (2001).    In a putative class action, the particular circumstances of the case did not warrant the imposition of a duty under O.C.G.A. § 23-2-53 to disclose an alleged defect concerning a gasoline leak in the fuel tanks of the Georgia plaintiffs' vehicles since there was no evidence of any relationship between the defendants and the plaintiffs. McCabe v. Daimler AG, F. Supp. 2d (N.D. Ga. Aug. 20, 2015).    Cited in Mangham v. Cobb, 160 Ga. 182, 127 S.E. 408 (1925); Information Buying Co. v. Miller, 173 Ga. 786, 161 S.E. 617 (1931); Floyd v. Boss, 174 Ga. 544, 163 S.E. 606 (1932); Morton v. Wallace, 177 Ga. 856, 171 S.E. 720 (1933); Blount v. Dean, 187 Ga. 494, 1 S.E.2d 653 (1939); Patterson-Pope Motor Co. v. Ford Motor Co., 66 Ga. App. 41, 16 S.E.2d 877 (1941); Jones v. Hogans, 197 Ga. 404, 29 S.E.2d 568 (1944); Thompson v. Thompson, 203 Ga. 128, 45 S.E.2d 632 (1947); Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948); Westbrook v. Beusse, 79 Ga. App. 654, 54 S.E.2d 693 (1949); Fuller v. Dillon, 220 Ga. 36, 136 S.E.2d 733 (1964); Hendrix v. Scarborough, 131 Ga. App. 342, 206 S.E.2d 42 (1974); Wilhite v. Mays, 239 Ga. 31, 235 S.E.2d 532 (1977); Gellis v. B.L.I. Constr. Co., 148 Ga. App. 527, 251 S.E.2d 800 (1978); Duncan v. Poythress, 515 F. Supp. 327 (N.D. Ga. 1981); Everson v. Franklin Disct. Co., 248 Ga. 811, 285 S.E.2d 530 (1982); Davis v. Northside Realty Assocs., 165 Ga. App. 96, 299 S.E.2d 186 (1983); Smith v. Ross, 255 Ga. 193, 336 S.E.2d 39 (1985); Clay v. Department of Transp., 198 Ga. App. 155, 400 S.E.2d 684 (1990); Justus v. Justus, 198 Ga. App. 533, 402 S.E.2d 126 (1991); Tower Fin. Serv., Inc. v. Jarrett, 199 Ga. App. 248, 404 S.E.2d 622 (1991); First Union Nat'l Bank v. Gurley, 208 Ga. App. 647, 431 S.E.2d 379 (1993); Mabry v. Pelton, 208 Ga. App. 891, 432 S.E.2d 588 (1993); Saffar v. Chrysler First Bus. Credit Corp., 215 Ga. App. 239, 450 S.E.2d 267 (1994); Garbutt v. Southern Clays, Inc., 894 F. Supp. 456 (M.D. Ga. 1995); Boardman Petro., Inc. v. Federated Mut. Ins. Co., 926 F. Supp. 1566 (S.D. Ga. 1995); American Petro. Prods., Inc. v. Mom & Pop Stores, Inc., 231 Ga. App. 1, 497 S.E.2d 616 (1998); Hendry v. Wells, 286 Ga. App. 774, 650 S.E.2d 338 (2007); Wright v. Apt. Inv. & Mgmt. Co., 315 Ga. App. 587, 726 S.E.2d 779 (2012).   RESEARCH REFERENCES   Am. Jur. 2d.   - 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 12.   C.J.S.   - 30 C.J.S., Equity, § 48. 37 C.J.S., Fraud, § 15.   ALR.    - Obligee's concealment of facts or evasive answers as fraud against surety, 8 A.L.R. 1485.    Seller's concealment of ownership of other property inducing exclusion of same from contract as actionable fraud, 26 A.L.R. 990.    Duty of vendor of real property to disclose to purchaser condition of building thereon which affects health or safety of persons using same, 141 A.L.R. 967.    What amounts to fraud on contractor, sustaining rescission or action for damages under building or construction contract, 166 A.L.R. 938.   Automobile insurance: concealment or nondisclosure of physical defects or conditions as avoiding coverage, 72 A.L.R.2d 804.   Liability of vendor of structure for failure to disclose that it was built on filled ground, 80 A.L.R.2d 1453.   Public contracts: duty of public authority to disclose contract or information, allegedly in its possession, affecting cost or feasibility of project, 86 A.L.R.3d 182.   Fraud predicated on vendor's misrepresentation or concealment of danger or possibility of flooding or other unfavorable water conditions, 90 A.L.R.3d 568.