1. The misrepresentation which will vitiate a contract of sale
and prevent a court of equity from aiding its enforcement must
relate to a material matter constituting an inducement to the
contract and respecting which the complaining party did not possess
at hand the means of knowledge, and it must be a misrepresentation
upon which he relied, and by which he was actually misled to his
injury.
2. Where the means of knowledge are at hand and equally
available to both parties, and the subject of purchase is alike
open to their inspection, if the purchaser does not avail himself
of these means and opportunities, he will not be heard to say, in
impeachment of the contract of sale, that he was deceived by the
vendor's misrepresentations.
This was a suit in equity to enforce the lien of two mortgages
upon two steamers. The case was thus:
On the 12th of July, 1864, one Slaughter, since deceased,
purchased of the complainant, Gerson, a steamboat named
Page 80 U. S. 380
the
George Law for the consideration of $40,000. Of
this sum he paid $15,000 in cash, and for the balance gave to
Gerson his bond, conditioned to pay the same in two installments of
$12,500 each in three and six months thereafter. To secure the
payment of these sums he at the same time executed to Gerson two
mortgages, one upon the steamboat which he purchased and the other
upon a steamboat named the
Chester, which he formerly
owned. The first installment on the boat not being paid at its
maturity, the present bill was filed to enforce the mortgages by a
sale of the steamboats, and the application of the proceeds to the
demand of the complainant.
The answer of the defendant admitted the execution of the bond
and mortgages, but set up as a defense to their enforcement that
they were obtained from him by misrepresentation and fraud, and set
forth the particulars in which such alleged misrepresentation and
fraud consisted.
The substantial averments in this respect were those: that the
defendant had established a line of steamboats from Baltimore to
various landings on Chester River, on the Eastern Shore of
Maryland, and landings on tributaries to that river; that the most
important of these landings was at Queenstown; that no boat drawing
more than 3 1/2 feet of water could reach the wharf at this place
except in case of an extraordinary high tide; that he purchased the
George Law of the complainant for this route upon a
representation that it drew only this number of feet when fully
laden; that this representation was false and fraudulent, and that
the steamer, when placed on the route, grounded upon her first trip
in 5 feet of water; and that, so soon as precise information was
obtained of this fact, the defendant called upon the complainant to
cancel the contract, offering at the same time to return the
steamboat purchased, but that the complainant refused to comply
with this proposition.
A great deal of evidence was taken in the case bearing upon
these allegations of misrepresentation and fraud. This was in many
particulars conflicting. Some of it tended to show that when the
negotiation was first entered upon,
Page 80 U. S. 381
Slaughter did particularly state that it was indispensable to
his purpose that the boat should not draw more than 3 1/2 feet
water; that upon Gerson's saying that the boat was cheap at the
price proposed for her, Slaughter said that he did not want her at
any price if she drew more than 3 1/2 feet; that Gerson repeatedly
said that she did not draw more, and that if she did, Slaughter
should have her for nothing. On the other hand, there was evidence
which -- if any conversation with Gerson, himself, had taken place
at all -- went to show that he never stated more than that,
according to the representation of the captain of the
boat, she drew no more than the desired depth of water, and that it
was plain that Gerson spoke only on the strength of what thus came
to him.
But whatever did or did not thus take place in the origin of
matters, it appeared that before the contract for the sale was
executed, and with the intention of examining the vessel, in view
of a purchase, Slaughter himself went to New York from Baltimore,
where he resided, taking with him two ship carpenters and a square
to measure the steamer; his son, who afterwards was captain of the
boat, accompanying the party. Whilst these persons were in New
York, every opportunity which they desired was given to them to
examine the vessel from one end to the other, and they made an
extended and careful examination accordingly. They made a trip on
her to one of the ports where she was running, and measured her
draft on two occasions -- once amidships and once at the stern and
bow. Gerson accompanied them on board on their arrival in New York
and told them to look for themselves and to go anywhere they
pleased about the boat; that he was not "a steamboat man," and that
he got all his information from the captain of the boat, to whose
statements he referred them. One of the carpenters who accompanied
Slaughter made a measurement of the boat while she was lying at the
dock without any load, and reported that she drew 4 feet 6 inches
at midships. The other of the carpenters made a measurement forward
and aft, and reported that the boat drew at both
Page 80 U. S. 382
places 3 feet 6 inches. Both of these measurements were
communicated to Slaughter, and the latter was accompanied with the
declaration that the boat drew too much water for his purposes. The
captain of the boat also took the defendant on to the dock where
she was lying and showed him that she was coppered three feet and
nine inches from the keel, and that she showed her copper three
inches out of water.
The bill of sale given to Slaughter contained a detailed
description of the steamer, but did not state her draught.
The circuit court gave a decree for the complainant, and from it
the defendant appealed to this Court.
Page 80 U. S. 383
MR. JUSTICE FIELD delivered the opinion of the Court.
A large amount of evidence was taken in this case bearing upon
the averments in the answer of misrepresentation and fraud on the
part of the complainant, and it is in many respects conflicting.
But the rules of law applicable to cases of alleged
misrepresentation by a vendor with respect to property sold are
well settled, and render of easy solution the questions upon which
this case must turn.
The misrepresentation which will vitiate a contract of sale and
prevent a court of equity from aiding its enforcement must not only
relate to a material matter constituting an inducement to the
contract, but it must relate to a matter respecting which the
complaining party did not possess at hand the means of knowledge,
and it must be a misrepresentation upon which he relied, and by
which he was actually misled to his injury. A court of equity will
not undertake, any more than a court of law, to relieve a party
from the consequences of his own inattention and carelessness.
Where the means of knowledge are at hand and equally available to
both parties, and the subject of purchase is alike open to their
inspection, if the purchaser does not avail himself of these means
and opportunities, he will not be heard to say that he has been
deceived by the vendor's misrepresentations. If, having eyes, he
will not see matters directly before them where no concealment is
made or attempted, he will not be entitled to favorable
consideration when he complains that he has suffered from his own
voluntary blindness and been misled by overconfidence in the
statements of another. And the same rule obtains when the
complaining party does not rely upon the misrepresentations, but
seeks from other quarters means of verification of the statements
made, and acts upon the information thus obtained.
The facts disclosed by the uncontradicted testimony of both
parties bring this case clearly within the principle here stated.
Previous to the execution of the contract of purchase, and with the
view of examining the steamboat, the
Page 80 U. S. 384
defendant went from Baltimore to New York, taking with him his
son, who subsequently became captain of the boat, and two ship
carpenters, and a square to measure her draught of water. Whilst
there, every opportunity was given him to examine the boat with his
carpenters, and a most thorough and careful examination was made by
them. On two occasions they measured the draught of the boat, and
they witnessed her speed by accompanying her on one of her trips.
The owner went with them to the boat on their arrival in New York,
and told them to look for themselves, and to go anywhere they
pleased about her. If, under these circumstances, the defendant did
not learn everything about her and ascertain her true draught, it
was his own fault, and it would be against the plainest principles
of justice to allow him to set up, in impeachment of the validity
of his contract, loose statements respecting the draught before its
execution, even though they were false in point of fact.
In
Attwood v. Small, * a case which
received great consideration in the House of Lords, the defendant
had sold to the complainants, constituting a company of numerous
persons, certain freehold and leasehold property, including mines
and ironworks, and had made certain statements respecting the
capabilities of the property. The purchasers, not relying upon
these statements, deputed some of their directors, together with
experienced agents, to ascertain the correctness of his statements.
These persons examined the property and works and the accounts kept
by the defendant, receiving from him and his agents every facility
and aid for that purpose, and they reported that the defendant's
statements were correct. Upon a bill filed to rescind the contract,
on the ground of fraud, the House of Lords decided that the
contract could not be rescinded, reversing in that respect the
decree of the Court of Exchequer not merely because there was no
proof of fraud, but because the purchasers did not rely upon the
vendor's statements, but tested their accuracy; and after having
knowledge, or the means of knowledge,
Page 80 U. S. 385
declared that they were satisfied of their correctness, holding
that if a purchaser, choosing to judge for himself, did not avail
himself of the knowledge or means of knowledge open to him or to
his agents, he could not be heard to say he was deceived by the
vendor's representations, the doctrine of
caveat emptor
applying in such case, and the knowledge of his own agents being as
binding as his own knowledge.
The doctrine, substantially as we have stated it, is laid down
in numerous adjudications. Where the means of information are at
hand and equally open to both parties and no concealment is made or
attempted, the language of the cases is that the misrepresentation
furnishes no ground for a court of equity to refuse to enforce the
contract of the parties. The neglect of the purchaser to avail
himself in all such cases of the means of information, whether
attributable to his indolence or credulity, takes from him all just
claim for relief.
We have thus far assumed that the evidence in the case before us
discloses false representations on the part of the vendor, but
justice to him requires us to say that the evidence is insufficient
to warrant this conclusion. The vendor stated to the purchaser that
he was not a steamboat man, meaning evidently, from the context,
that he was not familiar with the particulars in regard to which
the purchaser desired information, and referred him to the
statements of the captain, at the same time inviting him and his
party to examine the boat in every particular. The measurement made
by one of his carpenters showed that the boat drew four feet and
six inches of water at midships whilst lying unloaded at the dock.
The measurement by the other carpenter showed that the boat then
drew, forward and aft, three feet and six inches, and both of these
measurements were reported to the defendant, and the latter was
accompanied by the declaration that the boat drew too much water
for his purpose. The captain of the boat also took the defendant on
to the dock, by which the boat was lying, and pointed out to him
that she was coppered three feet and
Page 80 U. S. 386
nine inches from the keel, and that she then showed only three
inches out of water, and, of course, that she then drew, forward
and aft, unloaded, three feet and six inches. The purchase was thus
made by the defendant, with his eyes open, after every opportunity
had been afforded him for the inspection of the vessel.
Decree affirmed.
* 6 Clark & Finnelly 232.
