Opinion ID: 2194251
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Heading Rank: 2

Heading: Rulings on the Motions for Directed Verdicts.

Text: Judge Miller, in the early case of McAleer v. Horsey, 35 Md. 439, the lodestar of all subsequent actions of deceit in Maryland, pointed out that the common law furnished, perhaps wisely, no definition of fraud. Judge Pattison, for the Court, in Schnader v. Brooks, 150 Md. 52, 132 A. 381, stated that the decisional law of this State had established principles which were controlling in that case of deceit. He then set forth the essentials of actionable fraud. In Babb v. Bolyard, 194 Md. 603, 72 A.2d 13, Judge Markell repeated that the decisions of this Court had established rules and precedents which govern actions of deceit, and he again stated, with some elaboration, the elements of actionable fraud. [3] We shall, therefore, not set them out in detail; briefly stated, they consist of representation of a material fact, falsity, scienter, deception and injury. The authorities seem to be uniformly in accord that in an action for fraud the alleged misrepresentation must, generally, be of a past or existing fact. Boulden v. Stilwell, 100 Md. 543, 60 A. 609; Schnader v. Brooks, supra; 37 C.J.S., Fraud, § 6. In its generic sense, a false representation is anything short of a warranty which produces upon the mind a false impression conducive to action. 37 C.J.S., Fraud, § 8. Ordinarily, however, the representation must be definite, and mere vague, general, or indefinite statements are insufficient, because they should, as a general rule, put the hearer upon inquiry, and there is no right to rely upon such statements. Robertson v. Parks, 76 Md. 118, 24 A. 411; 37 C.J.S., Fraud, § 8. Whether the statements, acts, or conduct of a person amount to a misrepresentation of a past or existing fact is ofttimes difficult of determination, and the courts have been reluctant to attempt to lay down any general hard and fast rule as to what constitutes a fraudulent representation, since this depends upon the particular circumstances and conditions in each individual case. However, the cases, rather uniformly, hold that representations as to the quality or condition of property are not actionable where they are mere expressions of opinion, Johnson v. Maryland Trust Co., 176 Md. 557, 6 A.2d 383, or where the parties have equal means of knowledge so that there is no right to rely upon the statements as to the quality or condition of the property. 37 C.J.S., Fraud, § 53c. But representations as to quality and condition may constitute fraud where they are asserted as statements of fact. 37 C.J.S., Fraud, § 53c. See also Pryor v. Foster, 130 N.Y. 171, 29 N.E. 123 (Heating capacity of a furnace); and Clogston v. Martin, 182 Mass. 469, 472, 65 N.E. 839, wherein the Court stated: We cannot say that the actual condition of the plumbing with its sewer connections    cannot be known so that within a reasonable and legal sense a representation of such condition may be made as of one's own personal knowledge. And representations as to quality or condition may amount to fraud where the speaker, by his statements, prevents the hearer from investigating the condition of realty, Henderson v. Henshall, 54 Fed. 320 (C.A., 9th), or personalty, Buschman v. Codd, 52 Md. 202; or where the facts are peculiarly within the knowledge of the speaker and difficult for the hearer to ascertain, as where the misrepresentations relate to latent defects. 37 C.J.S., Fraud, § 53c; Cook v. Gill, 83 Md. 177, 34 A. 248; Buschman v. Codd, supra . The cases from other jurisdictions are collected in 37 C.J.S., Fraud, § 34a, n. 78. Having in mind the above principles of law, and assuming, as we must, the truth of plaintiffs' evidence, with the most favorable permissible inferences, we proceed to consider, separately, the directed verdicts in favor of the defendants. In doing so, we do not decide any question as to the truth or falsity of the testimony, nor do we intimate any opinion of ours as to the credibility of the witnesses. These are functions of the jury; our duty is merely to determine whether there was any legally sufficient evidence against any of the defendants to take the case to the jury. Plaintiffs' claim of the falsity of Benton's statement to them concerning the adequacy of the sewage disposal system has a double thrust. First, they set out, and attempted, to prove that the soil of their lot was not suitable for septic tank use, a fact known, or that should have been known, by Benton. It would serve no useful purpose to discuss this contention at length, for, as we pointed out above, the plaintiffs ended up by proving that the soil was adaptable for that purpose. We hold that the plaintiffs offered no legally sufficient evidence to take the case to the jury on this issue. The other thrust is a claim that they were entitled to go to the jury on the theory that Benton's statement was false, because they had offered evidence to show that he knew the size of plaintiffs' family and also the size of the septic tank system, which was palpably too small for their family. Upon analysis of the evidence, we think the claim has substance. It was conceded that he knew that the soil in Seabrook Acres consisted predominantly of clay  a soil that can be adapted to septic tank use, but with more difficulty than others of a more porous nature; that he obtained a permit for the installation of a small unit to accommodate a small family, as described above; that he agreed in the contract of sale to alter the interior of the dwelling; that it finally consisted of eight rooms and two baths; and that he did not request, nor obtain, a remodeling permit, in order to increase the capacity of the sanitary system. And Mrs. Fowler testified that, when asked if the plaintiffs could rely on the system, Benton replied:    there wasn't any reason in the world why we couldn't feel that it was adequate [italics ours] because it had been put in according to Health Department regulations and had been approved by the Health Department. Mr. Fowler testified, in substance, to a like statement made by Benton to him. It is obvious that the actual size of the system (it being under ground) was peculiarly within Benton's knowledge, and very difficult for the buyers to ascertain. This assertion by Benton was not a vague, indefinite, general statement incapable of particular application, such as the buyer could not go wrong [4] if he purchased a house, or that the purchaser would be perfectly safe on the concrete, roof, and everything else of construction. [5] it referred specifically to the septic tank system actually installed by Benton, and was tantamount to an assertion that he, a man of many years' experience as a builder, knew of no reason why the plaintiffs would not find the system adequate, and one of the reasons why they should find it adequate was that it had been approved by the Health Department. As a matter of fact, the only approval given by the Health Department with reference to adequacy was for a five-room one-bath dwelling for three residents, and Benton knew this. And there was testimony, as pointed out above, that Benton had substantially enlarged the house, and he knew that plaintiffs' family consisted of eleven people. Therefore, if the jury believe the above testimony of the Fowlers, or either of them, the jury would be entitled to find (if they so determine) that Benton's statement was a misrepresentation of fact, and that Benton, a builder of 35 years' experience, knew it was false. True the system had been erected according to the permit and had been approved by the Health Department, but (repeating) it had not been approved with regard to adequacy and capacity for a family of eleven. What this Court said in Brager v. Friedenwald, 128 Md. 8, 32, 97 A. 515, is particularly apposite here: Where one is under no legal obligation to speak, his mere silence or his mere non-disclosure of material facts will not be sufficient [see also Fegeas v. Sherrill, supra , 218 Md. 472, 147 A.2d 223], but if in addition to non-disclosure he makes `some active mis-statements of fact, or, at all events, such a partial and fragmentary statement of fact,' as entirely misleads one to his injury the legal situation is entirely changed:   . An early English case, Foster v. Charles, 19 E.C.L. 113, expresses the same principle in this manner: If a man, professing to answer a question, select those facts only which are likely to give a credit to the person of whom he speaks, and keeps back the rest, he is a more artful knave than he who tells a direct falsehood. The Supreme Judicial Court of Massachusetts, in Van Houten v. Morse, 38 N.E. 705, states the principle thus: But a partial and fragmentary disclosure, accompanied by the wilful concealment of material and qualifying facts, would be as much of a fraud as actual misrepresentation, and would be in effect misrepresentation. Hence, if we assume that Benton could have remained silent with reference to the adequacy of the system installed without being guilty of any fraud, the jury, should they believe the Fowlers' version of Benton's statement, would be entitled to find that the statement was of such a partial and fragmentary nature as to prevent further investigation by the Fowlers, and to mislead them to their injury. The case at bar is distinguishable from such cases as Milkton v. French, 159 Md. 126, 150 A. 28, and Fegeas v. Sherrill, supra . In the French case, the plaintiff prayed for the rescission of a contract of sale. He had purchased a new but finished house, about whose quality or condition the sellers specifically refused (although they were requested) to give any warranty. He claimed that one of the sellers stated that he [the buyer] would be perfectly safe [italics ours] on the concrete, roof, and everything else of the construction, because [the speaker, one of the sellers] had built it himself, and this amounted to a false representation entitling him to rescind the contract. The Court held that the words used were so vague and general that they were incapable of particular application, and, therefore, did not amount to a misrepresentation, but were indefinite generalities of exaggeration. Further, the Court said that at the time of the statement the vendors knew nothing to the contrary, and there is nothing omitted from the statement [italics supplied] which was then known to the vendors and whose omission made this statement false or misleading, and held that the statement was, therefore, free of fraud and not a misrepresentation. In the case at bar, Benton's alleged statements to the Fowlers omitted any mention of the size or capacity of the septic tank system that he had actually installed. In Fegeas, another rescission case, we held a statement by one of the sellers that the purchasers could not go wrong in buying a certain house was not a clear and definite representation of any particular fact, did not condescend to detail, and amounted to no more than an indefinite generality of exaggeration. See also Appel v. Hupfield, 198 Md. 374, 84 A.2d 94, and Polson v. Martin, 228 Md. 343, 180 A.2d 295 in which alleged statements were held not to be false representations of facts. Although Benton does not urgently press the point, he mentions, in his brief, that the contract involved herein contained an integration, or merger, clause. We do not find it necessary to discuss the point elaborately. In the first place, there was no objection to the testimony of Mr. and Mrs. Fowler as to the statements made to them by Benton with reference to the adequacy of the sanitary system. And where fraud is alleged to have caused the execution of a written contract, a merger clause therein is not conclusive. 5 Williston, Contracts, (Third Ed., Jaeger), § 811; Restatement, Contracts, § 238. Cf. Schmidt v. Milhauser, 212 Md. 585, 130 A.2d 572; Rinaudo v. Bloom, 209 Md. 1, 120 A.2d 184. Having decided that the plaintiffs offered sufficient evidence from which the jury might decide that there had been a false representation of a material fact (the main issue in the case), it is only necessary to add that there was also evidence, as we have set it out above, from which it would have been possible for the jury to have found the other essential elements of actionable fraud, which was all that was necessary to entitle the plaintiffs to have their case against Benton passed upon by the jury. The trial judge was correct, we think, in granting the motions in favor of Halley and Storch. It is true that Garber was Halley's agent and there was testimony that he made almost the same statement concerning the sanitary system as that attributed to Benton; but there was no showing that either Halley or Garber knew anything about the size of the system, or the permit issued for its installation, or that there was any obligation upon their part to have such knowledge. We are unable to discover in the record where the plaintiffs adduced any evidence against the appellee, Storch, that would support a finding of a single one of the essential elements of fraud on his part; hence the directed verdict in his favor was not only proper, but was required. Judgments in favor of Storch and Halley affirmed; judgment in favor of Benton reversed and new trial awarded; appellants to pay two-thirds of the costs, and appellee Benton, one-third.