FRAUD. An endeavor to alter rights, by deception touching motives, or by circumven tion not touching motives. Bigelow, Fraud 5.
Fraud is sometimes used as a term syn onymous with covin, collusion, and deceit, but improperly so. Covin is a secret con trivance between two or more persons to defraud and prejudice another of his rights. Collusion is an agreement between two or more persons to defraud another under the forms of law, or to accomplish an illegal purpose. Deceit is a fraudulent contrivance by words or acts to deceive a third person, who, relying thereupon, without careless ness or neglect of his own, sustains damages thereby. Co. Litt. 357 b; Bacon, Abr. Fraud.
Actual or positive fraud includes cases of the intentional and successful employment of any cunning, deception, or artifice, used to circumvent, cheat, or deceive another. 1 Story, Eq. Jur. § 186.
For instance, the misrepresentation by word or deed of material facts, by which one exercising reasonable discretion and confidence is misled to his injury, whether the misrepresentation was known to be false, or only not known to be true, or even if made altogether innocently; the suppression of material facts which one party is legally or equitably , bound to disclose to another ; all cases of uncOnscientious advantage in bargains obtained by imposition, circumven tion, surprise, and undue influence over per sons in general, and especially over those who are, by reason of age, infirmity, idiocy, lunacy, drunkenness, coverture, or other in capacity, unable to take due care of and pro tect their own rights and interests ; bar gains of such an unconscionable nature and of such gross inequality as naturally lead to the presumption of fraud, imposition, or (' undue influence, when the decree of the court can place the parties in statu quo; cases of surprise and sudden action, without due deliberation, of which one party takes ad vantage; cases of the fraudulent suppres sion or destruction of deeds and other in struments, in violation of, or injury to, the rights of others ; fraudulent awards with intent to do injustice; fraudulent and illu sory appointments and revocations under powers ; fraudulent prevention of acts to be done for the benefit of others under false statements or false promises ; frauds in relation to trusts of a secret or special nature; frauds in verdicts, judgments, de crees, and other judicial proceedings ; frauds in the confusion of boundaries of estates and matters of partition and dower.; frauds
In the administration of charities ; and frauds upon creditors and other persons standing upon a like equity, are cases of actual fraud. 1 Story, Eq. Jur. c. 6.
Legal or constructive fraud includes such contracts or acts as, though not originating in any actual evil design or contrivance .to perpetrate a fraud, yet by their tendency to deceive or mislead others, or to violate private or public confidence, are prohibited by law.
Thus, for instance, contracts against some general public policy or fixed artificial policy of the law ; cases arising from some peculiar confidential or fiduciary relation between the parties, where advantage is taken of that relation by the person in whom the trust or confidence is reposed, or by third persons; agreements and other acts of parties which operate virtually to delay, defraud, and de ceive creditors ; purchases of property, with full notice of the legal or equitable title of other persons to the same property (the pur chaser becoming, by construction, particeps criminis with the fraudulent grantor) ; and voluntary conveyances of real estate, as af fecting the title of subsequent purchasers ; 1 .Story, Eq. Jur. c. 7. See Bisph. Eq. 205.
According to the civilians, positive fraud consists in doing one's self, or causing an other to do, such things as induce the op posite party into error, or retain him there. The intention to deceive, which is the char acteristic of fraud, is here present. Fraud is also divided into that which has induced the con tract, &Las dams causam contractui, and incidental or accidental fraud. The former is that which has been the cause or determining motive of the contract, that without which the party defrauded would not have contracted, when the artifices prac tised by one of the parties have been such that it is evident that without them the oth er would not have contracted. Incidental or accidental fraud is that by which a: person, otherwise determined to contract, is deceived on some accessories or incidents of the con tract,—for example, as to the quality 'of the object of the contract, or its .price,—so that he has made a bad bargain. Accidental fraiid does not, according to the civilians, avoid the contract, but simply subjects the party to damages. It is otherwise Where the fraud has been the determining cause of the contract, quit causam dedit contractui: in that case the contract is void. Toullier, Dr. Civ. Fr. 11v. 3, t. 3, C. 2, n. § 5, n. 86, et seq.