Court Opinion

ID: 9635730
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:01:52.257163+00
Date Added: 2024-06-11T11:21:10.715530
License: Public Domain

Henderson, J.,
delivered the following dissenting opinion.
I find myself in disagreement with the other members of the Court in this case, both on the facts and the law, and shall try to indicate my views without elaboration. On the facts, I think the representations by the sales agent, that the building was in good condition, and that a new roof had been “recently” installed, were not so definitely fraudulent misstatements of fact as to support an action even against the agent. “Recently” is a relative term, and might well cover a period of more than seven years before the sale, particularly where the original roof lasted for twenty-five to thirty years. The agent honestly relied upon statements made to him by the former vendors. No doubt it was negligent for him not to check the copy prepared in his office, which repeated the former description. But I do not think his negligence amounts to intentional fraud, or such reckless indifference to truth as to be equivalent to actual knowledge.
Moreover, the purchasers of the stock knew that the agent was not an expert, and the source of his information was not disclosed. They inspected the building themselves, and might easily have discovered the inaccuracy by having the building examined by an expert, or by checking the vendors’ books and records through their auditor. I doubt whether they relied, or were justified in relying, on the statement. Cf. Harding v. Southern Loan & Ins. Co., 10 S. E. 2d 599 (N. C.). See also Brodsky v. Hull, 196 Md. 509, 516, and Babb v. Bolyard, 194 Md. 603, 609. Failure to rely is relevant on the question of causation, even though contributory negligence is not a defense to an intentional wrong. See Bohlen, Deceit, Negligence, or Warranty, 42 Harv. L. R. 733.
As the opinion points out, Maryland has followed the strict rule in actions based on deceit as laid down in Derry v. Peek, *59614 A. C. 337. Cf. Cahill v. Applegarth, 98 Md. 493, 502. In Derry v. Peek a prospectus contained a false statement that the tramway company had the right to use steam or mechanical motive power, instead of horses, but it was held that the misrepresentation was honestly believed, although negligent, and that deceit would not lie. Prosser, Torts (2d ed.), § 88, p. 537, points out that the majority of American courts follow the rule announced in this case, but that some courts render lip service to it, while permitting recovery “for misrepresentation which falls short of actual intent to deceive.” I fear we fall into the same error, which promotes uncertainty of decision.
I am also concerned with the effect of the acceptance of a deed to the property. Ordinarily, such acceptance would merge all prior representations, even when expressed in a prior contract of sale. See Pybus v. Grasso, 59 N. E. 2d 289 (Mass.). I think the fact that the sale was of shares of stock is not controlling. Here, there was a separate guaranty agreement which was entirely silent as to any warranties in regard to the building. I take it that no action would lie here on the theory of warranty. It seems unfortunate to enlarge the established rule as to fraudulent misrepresentation under such circumstances.