Court Opinion

ID: 6689565
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:36:29.756139+00
Date Added: 2024-06-11T16:01:04.261159
License: Public Domain

SMITH, J.
(-concurring). I am fully persuaded' that section 2312, Civil Code, presctffibes .the same rule oí damages in deceit actions as in all other tort actions, viz. am amount which- will compensate the injured party for the loss proximatefy .caused- by the tort, -and that the common-law rule of damages in deceit actions was not intended to be, and was not, -changed by the -statute. The real question, therefore, is, What was the rule of damages in deceit -actions at common Haw? In this, as in- -other matters, common-law courts differed in) their views. The real conflict in ithie decisions lies' in .the adoption of different methods O'f determining the amount to be alwlarded a-s -Compensation for the injury. I think, therefore, the assumption that at common law -the rule -of -damages in deceit constituted -an- exception to the genera! rule of damages in ‘ tort actions is erroneous. A suggestion not infrequently found' in- cases which support the minority rule is that tihle result of the majority rule is' toi make the injured party 'better off than if no, deceit (had been practiced-. The conclusion is 'biased upon the proposition that “if there had 'been no deceit, .there would have -been no bargain.” This statement is incorrect and in itself deceptive. Wherever an action of deceit lies, there must have been false representations. The false representations were the direct moving cause which brought the bargain into existence. But -the bargain would have been made just 'tilie same had the representations been- true. The correct proposition, therefore, is, “If the representations' had- been true, and not false, there would h-ave been no damagés” not that there would have been no- bargain-. Is it true, then1, that damages under the majority rule make the injured party better off -than he wioiu-ld have been -had there been no deceit?
Where the remedy chosen is for damages for the- deceit, the contract itself remains in full force and is. unaffected- -by the action. It will not be u-rgerf in- this court /and certainly cannot be urged! by the wrongdoer, that the injured party was not entitled!, under the contract, to receive an article -such as the wrongdoer described. The rights- icif bath parties- became fixed- -by the cfonitraot. Bach became the owner of that which- he received under lit. The wrongdoer received the thing he was1 entitled to receive. Bo-r that which he received) he gave the injured party a thing ¡which he represented to posses® attributes whioh gave it *356a certain value. Tlhie injured) party was entitled to receive that which he wtas induced to believe he was receiving,, and which he wiouid have received under am honest contract. H,is light to receive the liin.d o(f thing aootnacited' for was fixed1 by the -contract. That ¡foe did not receive it was due to the deceit which wrongfully induced him to believe -he -was receiving it when be was not -i-n flact receiving if. Pie had the right: to rely, and dlid rely, upon the representations. The essential wrong was in- the falsity of the representations relating to the value, or qualities, of' the thing -which Itifoe injured- party was induced to accept instead -o-f that which he was entitled’ to receive. It is a,p>piarent that, if -the representations had been true instead of false, fh,e injured party would ’have received property “answering to the representa tions1 made.” The -difference between its value, therefore, measures the loss or damage proximately -caused by the deceit. It is suggested that under the majority rule the damages are measured fo-y the enormity oif the toirt — the' size o-f the misrepresentations’ — rather than by the effect of the misrepresentations-. Precisely tine same objection would lie to> the rule of -damages far breach of -warranty. If the damages may be enhanced by .the size -o-f tire warranty, why mlay they not he enhanced- by the size of the false representations'?
Both !are .purely voluntary acts ,op tire part of the wrongdoer. In one -case, the injured party relies upon the warranty; in the other, -upon the representations for a tort -which, -in substance 'and in all its essential facts-, is the same as a warranty. One is an -obligation arising from a contract; the other, am obligation rising from a l'ega'll -duty. The breach of the obligation has the same effect -in -either case. That one is an express, and the oth'er an implied, obligation wo-ukl not sean, to- be material in determining the amount which in either case will compensate the -injury. In one -case -compensation is given for a false warranty; in the other, for a false representation. The majority -rule awards the injured! party an amount which maltes! good the representations’. B-elaring in mind1 that in actions both for breada of contract and for tort tine rule ¡is -the -same — compensatory damages — it is difficult to see why identical damages do not flow from false representations of facts which would flow from faitee warranties of the identical- flacts'. The fact that -the same -damage flows from *357the 'violation of a right created by contract, which flows from' the ■violation of the same right created! by law, is immaterial, so long as thie rule of compensation is the basis of recovery in both instances. It is sometimes suggested, that where the party -dtefrauided decidles to abide by the contract and) sues for damages’, hie is not- entitled' to receive anything except that which- he determined to keep, .together with damages for hdsi “change of position.” True enough; but' iwhat is meant by “change of position” ? 'What would have 'been his “position” if the representations had been- true' instead! of false? Plainly, he would have had an article of the kind -represented. What did he receive? Plainly, an article of a -different bind1. That situation presents the '“change of position” which was directly brought about by the deceit. If there had been no deceit there would have been a '“'change of .position,” but no damage.
It may be assumed that if the defendant had told the -truth about the property there would have been no sale or exchange, neither would there have been • .any deceit, nor .any action- for damages. On the contrary, the action is- based upon the fact that the -defendant did not tel the truth. It is- one thing to say that if he had! toldl the truth there would have been no- sale,— it is an entirely -different thing to say that if the representations had been true there would! have been no contract. The suggestion in certain of the derision® that rescission is an-¡alternative remedy, and may be resorted to in cases' of deceit ■■rather than an action for damages under the majority rule is not convincing. The relief obtained under the minority rule is substantially the same as in rescission., but when the injured party chooses the remedy by action, for 'damages for deceit he has the legal- right to, and -does-, stand upon his contract. He should not be compelled to abandon his bargain by seeking- rescission or accepting damages 'under the minority rule, which are merely the equivalent of .rescission. This court did- not adopt the minority rnle in Lunscheon v. Wocknitz, 21 S. D. 285, 111 N. W. 632. On the contrary', we said that:
“A purchaser of real estate has the right to rely upon- the representations of the vendor touching the quality of the property, and -may * * * recover -compensatory damages,”
Sections 2293, 2312, Civil Code; Ettlinger v. Weil, 94 App. *358Div. 291, 87 N. Y. Supp. 1049. Mr. Sutherland in his work on Damages states that the majority rule has been recognized in the following and perhaps other states: Connecticut, Alabama, Illinois, Iowa, Kansas, Massachusetts, Maine, Michigan, Missouri, New York, iQlfio,- Texas, Washington, California, Georgia, Indiana, North Carolina, North Dakota, Oklahoma, Pennsylvania, Wisconsin, New Jersey, Arkansas, Oregon, Florida, Kentucky, New Hampshire, Mississippi, Vermont, Colorado, Nebraska, South Carolina, Utah,' and Tennessee. Such 'an array of authoritjr can hardily be disposed of by the assertion that Ithe majority rule is founded upon unsound reasoning.