What constitutes fraud. 1. It must be such an appropriation as is not permitted by law. 2. It must be with knowledge that the property is another's, and with design to deprive him of it. 3. It is not in itself a crime, for want of a criminal intent; though it may become such in cases provided by law. See Poll. Contr. 534.
Fraud, in its ordinary application to cases of contracts, includes any trick or artifice employed by one person to induce another to fall Into or to detain him in an error, so that he may make an agreement contrary to his interest; and It may consist in representing or concealing material facts,. and may be effected by words or by actions.
See Tyler v. Savage, 143 U. S. 79, 12 Sup. Ct. 340, 36 L. Ed. 82.
Where a party intentionally or by design misrepresents a material fact or produces a false impression, in order to mislead another, or to obtain an undue advantage of him, there is a positive fraud in the fullest sense of the term ; Barnard v. Iron Co., 85 Tenn. 139, 2 S. W. 21. It must relate to facts then existing or which had previously existed; Adams v. Schiffer, 11 Colo. 15, 17 Pac. 21, 7 Am. St. Rep. 202 ; Gray v. Mfg. Co., 127 Ill. 187, 19 N. E. 874. If a person take upon himgelf to state as true that of which he is wholly ignorant, he will, if it be false, incur the same legal responsibility as if he had made the statements with knowledge its falsity ; Hexter v. Bast, 125 Pa. 52, 17 Atl. 252, 11 Am. St. Rep. 874; Chatham Furnace Co. v. Moffatt, 147 Mass. 403, 18 N. E. 168, 9 Am. St. Rep. 727 ; Wells v. McGeoch, 71 Wis. 196, 35 N. W. 769; Middleton v. Jerdee, 73 Wis. 39, 42 N. W. 629 ; Mooney v. Davis, 75 Mich. 188, 42 N. W. 802, 13 Am. St. Rep. 425 ; Swayne v. Waldo, 73 Ia. 749, 33 N. W. 78, 5 Am. St. Rep. 712.
While on the one hand, the courts have aimed to repress the practice of fraud, on the other, they have required that before relieving a party from a contract on the ground of fraud, it should be made to ap pear that on entering into such contract he exercised a due degree of caution. Vigilanti bus, non dormientibus, subvemiunt leges. A misrepresentation as to a fact the truth falsehood of which the other party has an opportunity of ascertaining, or the conceal ment of a matter which a person of sense, vigilance, or skill might discover, does, not in law constitute fraud. See Andrus e Smelting Co., 130 U. S. 648, 9 Sup. Ct. 645, 32 L. Ed. 1054. The party must not be in dolent; 49 Ind. 427. Misrepresentation as to the legal effect of an agreement does not avoid it as against a party whom such mis representation has induced to enter into it, -every man being presumed to know the legal effect of an instrument which he signs or of an act which he Performs ; Ans. Contr.
154. But see Labbe v. Corbett, 69 Tex. 503, 6 S. W. 808. See MISREPRESENTATION.
An intention to violate entertained at the time of entering into a contract, but not afterward carried into effect, does not vitiate the contract ; per Tindal, C. J., 2 Scott 588 ; 4 B. & C. 506 ; per Parke, B., 4 M. & W. 115, 122 ; but making a promise as an in ducement to a contract, with no intention of performing it, constitutes a fraud for which the contract may be rescinded; Lawrence v. Gayetty, 78 Cal. 126, 20 Pac. 382, 12 Am. St. Rep. 29; Albitz v. Ry. Co., 40 Minn. 476, 42 N. W. 394 ; Mutual Reserve Life Ins. Co. v. Seidel, 52 Tex. Civ. App. 278, 113 S. W. 945 ; Pollard v. McKenney, 69 Neb. 742, 96 N. W. 679, 101 N. W. 9 ; but see • Murray v. Smith, 42 Ill. App. 548. When one person misrepre sents or conceals a material fact which is peculiarly within his own knowledge, or, if it is also within the reach of the other party, as a device to induce him to refrain from in quiry, and it is shoWn that the concealment or other deception was practised with respect to the particular transaction. such transac tion will be void on the ground of fraud ; 6 Cl. & F. 232; per Tindal, C. J., 3 M. & G. 446, 450. See Emmons v. Moore, 85 Ill. 304; Young v. Hughes, 32 N. J. Eq. 372 ; 12 Ves. 78. And even the concealment of a matter which may disable a party, from performing the contract is a fraud; 9 B. & C. 387.
Misrepresentations must be fraudulently and intentionally made, or so recklessly as to be equivalent to fraud ; Pittsburgh Life & Trust Co. v. Ins. Co., 148 Fed. 674, 78 C. C. A. 408 ; there must be moral turpitude or recklessness and carelessness; Furnas v. Fri day, 102 Ind. 129, 1 N. E. 296. It is held that there must be an intent to deceive ; Jolliffe v. Collins, 21 Mo. 338 ; Summers v. Ins. Co., 90 Mo. App. 691; but in Bishop v. Seal, 87 Mo. App. 256, it was held that actual intent is not a necessary element ; and in Texas Cotton Products Co. v. Denny Bros. (Tex.) 78 S. W. 557, that intent is not a necessary element, if the misrepresentation was of a character calculated to deceive. In Michigan it is held that a misrepresentation, though made innocently and without intent to mislead, gives a right of action if the other party was misled ; Holcomb v. Noble, 69 Mich. 396, 37 N. W. 497.