James E. Huntress vs. William K. Blodgett & others

Massachusetts Supreme Judicial Court1910-06-27

206 Mass. 318

Summary · law.co

Holding. The court overruled all exceptions and affirmed that the jury was properly instructed, as the evidence supported liability for false representations made with intent to deceive and relied upon by the plaintiff, and neither the statute of frauds nor a defense of due diligence applied under these circumstances.

The plaintiff brought suit against the defendant William K. Blodgett for damages based on false representations made to induce the plaintiff to invest money and become a stockholder in a corporation. The defendant requested several jury instructions that would have eliminated or restricted liability. The court rejected these requested instructions because substantial evidence supported that the defendant knowingly made false statements with intent to deceive, which the plaintiff relied upon in making the payments at issue.

The defendant particularly argued that the statute of frauds barred recovery for oral misrepresentations concerning the assets and property of a third company. However, the court found this argument inapplicable because the representations were not made to induce a third party to extend credit based on that party's creditworthiness; rather, they were made to induce the plaintiff himself to invest in a corporation. The defendant also contended that his due diligence in investigating the truth of his statements would shield him from liability, but the court held that even reasonable investigation does not excuse liability for knowingly false statements of fact that are relied upon and cause loss.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether false representations made to induce investment in a corporation fall within the statute of frauds
Scope of the statute of frauds—whether it applies when representations concern a third party but are made to induce plaintiff's own transaction
Whether due diligence in investigating statements of fact relieves liability for false oral representations

Procedural posture

The defendant appealed by exception to the trial court's refusal to give requested jury instructions that would have barred or limited the plaintiff's recovery.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Knowlton, C. J.

The exceptions in this case are to the refusal of the judge to give to the jury certain instructions requested by the defendant.

The first request was for an instruction, “ That the plaintiff upon all the evidence is not entitled to recover.” This was rightly refused. There was much evidence that the defendant, with an intent to deceive the plaintiff, made false representations for the purpose of inducing him to pay money for the ben efit of the defendant and others, and that the plaintiff, relying upon these representations, made the payments set forth in his declaration.

The fifth request was that “ the defendant cannot be held for any damages to the plaintiff by reason of any dealings of the said plaintiff, or of the National Maple Sugar Company, which were not with or on account of the H. J. Blodgett Company.” But the claim was for damages growing out of dealings with the defendant, William K. Blodgett, as an individual, which were witnessed in part by a contract in writing signed by the plaintiff as the party of the first part and by this defendant as the party of the second part, the making of which contract was induced by the false representations of this defendant.

The sixth, seventh and eleventh requests were to the effect that the defendant would not be liable for oral false representations which related to the assets and property of the H. J. Blodgett Company. These requests were founded upon the statute of frauds, R. L. c. 74, § 4, which provides that “ No action shall be brought to charge a person upon or by reason of a misrepresentation or assurance made concerning the character, conduct, credit, ability, trade or dealings of any other person, unless such representation or assurance is made in writing,” etc. This provision, which has been re-enacted from time to time, is founded upon the St. 1834, c. 182, § 5, which contains the words, “to the intent or purpose that such person may obtain credit, money or goods thereupon.” It is established in a series of decisions that its meaning is the same .as if these words had been retained in the revisions of the statutes. Medbury v. Watson, 6 Met. 246. Norton v. Huxley, 13 Gray, 285. Mann v. Blanchard, 2 Allen, 386. In the present case the representations were not made with an intent or purpose that the party concerning which the defendant was speaking should obtain credit, money or goods upon the representations. They were made to induce the plaintiff to become a stockholder in a corporation and to put in money in payment for his stock, which corporation was expected to succeed to the business of the H. J. Blodgett Company, concerning which a large part or all of the representations were made. The question is fully covered by the decision in Walker v. Russell, 186 Mass. 69, in which it was held that the statute applies only to representations made to induce the plaintiff to enter into a transaction which will result in a debt due to the plaintiff from a third person, concerning whose character, conduct, credit, ability, trade or dealings the representations were made.

The eighth request did not contain a true statement of the law. Due diligence to ascertain the truth in regard to statements made as of matters of fact within one’s own knowledge is not enough to relieve the maker of them of liability, if they are false and are relied upon as true, and the person to whom they are made suffers loss thereby. Litchfield v. Hutchinson, 117 Mass. 195. Chatham Furnace Co. v. Moffatt, 147 Mass. 403. Montgomery Door & Sash Co. v. Atlantic Lumber Co., ante, 144.

Exceptions overruled.