the purchaser is a stranger to it, and under representations inducing him to buy, he acts fraudulently, and violates integrity and fair dealing. The inference of fraud is easily and almost inevitably drawn, when there is a suppression or concealment of material circumstances, and one of the contracting parties is knowingly suffered to deal under a delusion.

So, the selling an unsound article for a sound price, knowing it to be unsound, is actionable. It is equivalent to the concealment of a latent defect. The same rule applies to the case where a party pays money in ignorance of circumstances with which the receiver is acquainted, and does not disclose, and which, if disclosed, would have prevented the payment. In that case, the parties do not deal on equal terms; and the money is held to be unfairly obtained, and repayment may be compelled. It applies also to the case, where a person takes a guaranty from a surety, and conceals from him facts which go to increase his risk, and suffers him to enter into the contract under false impressions. Such concealment is held to be fraud, and vitiates the contract.

But, if the defects in the article sold, are open equally to the observation of both parties, the law does not require the vendor to aid and assist the observation of the vendee. Even a warranty will not cover defects that are plainly the objects of the senses; though if the vendor says or does any thing whatever, with an intention to divert the eye, or obscure the observation, of the buyer, even in relation to open defects, he will be guilty of an act of fraud. An inference of fraud may be made, not only from deceptive assertions and false representations, but from facts, incidents, and circumstances, which may be trivial in themselves, but decisive evidence, in the given case, of a fraudulent design.

When, however, the means of information relative to facts and circumstances affecting the value of the commodity, are equally accessible to both parties, and neither of them does or says any thing tending to impose on the other, the disclosure of any superior knowledge which one party may have over the other, as to those facts and circumstances, is not requisite to the validity of a contract. There is no breach of any implied confidence, that one party will not profit by his superior knowledge, as to facts

and circumstances open to the observation of both parties, or equally within the reach of their ordinary diligence; because neither party reposes in any such confidence, unless it be specially tendered or required. Each one, in ordinary cases, judges for himself, and relies upon the sufficiency of his own knowledge, skill, and diligence.

The common law affords to every one reasonable protection against fraud in dealing, but it does not go to the romantic length of giving indemnity against the consequences of indolence and folly, or of careless indifference to the ordinary and accessible means of information. It reconciles the claims of convenience with the duties of good faith, to every extent compatible with the interests of commerce; meaning by the term commerce, every kind of ordinary intercourse in the way of business transactions.

This it does, by requiring the purchaser to apply his attention to those particulars which may be supposed within the reach of his observation and judgment; and the vendor to communicate those particulars and defects which cannot be supposed to be immediately within the reach of such attention.* Chancellor Kent is of the opinion, that the common law has carried the doctrine of disclosures by each party in the formation of the contract of sale, to every reasonable and practicable extent, that is consistent with the interests of society. "The only difference (in regard to disclosures) "between writers on the highest branches of the moral law, and the doctrines of our own judicial tribunals is, that, while both hold it to be the duty of the seller to disclose all the defects or impairing circumstances within his knowledge, the common law, on account of the difficulty of enforcing the rule in all cases, and the disorders it might sometimes occasion in society, draws a line of distinction between circumstances which are open equally to the observation of both parties, and those which are within the knowledge and reach of one alone. The concealment of the latter it punishes."

On this subject, the civil law, as stated by the learned and

* Kent's Commentaries on American Law, Vol. II. pp. 377-380.

† Idem. Vol. II. p. 384.

Manuscript Lecture of Professor Greenleaf, of Harvard University.

accurate Pothier, which is the law of the greatest part of continental Europe, and the basis of the code of Louisiana, is rather more severe in its requisitions, than the common law of England or of the United States. He says, "Although, in many transactions of civil society, the rules of good faith only require us to refrain from falsehood, and permit us to conceal from others that which they have an interest in knowing, if we have an equal interest in concealing it from them, yet in interested (pecuniary) contracts, among which is the contract of sale, good faith not only forbids the assertion of falsehood, but all reservation concerning that which the person with whom we contract has an interest in knowing, touching the thing which is the subject of the contract." * "In the application of this rule, the same commentator is of opinion, that the seller is obliged to disclose to the buyer every circumstance within his knowledge relating to the subject, which the latter has an interest in knowing; and that he sins against the good faith which ought to reign in these transactions, if he conceals any such circumstances."†

2. There are, too, some branches of our own law, which, in regard to contracts, are said to be more strictly in conformity with the decisions of an enlightened conscience, than the common law. This is affirmed to be true of equity jurisprudence.‡ Yet this superior perfection, claimed in behalf of equity, pertains rather to the means and facilities, which it is permitted to use, in order to attain its end, to the manner in which it grants relief and applies its remedies, and to the extent of its jurisdiction, than to the object at which it aims; to wit, the attainment of the greatest possible measure of justice and rectitude, — which object is not less the aim of the common law. There are "latent frauds and concealments, which the process of courts of common law is not adapted to reach." The object of equity is, to open the breasts of parties, and "courts of equity address themselves to the conscience of the defendant, and require him to answer, upon his oath, the matters of fact stated in the bill, if they are within

* Wheaton's Reports, Vol. II. p. 185, note.

+ Manuscript Lecture of Professor Greenleaf, of Harvard University. Kent's Commentaries on American Law, Vol. II. pp. 382–385.

his knowledge; and he is compellable to give a full account of all such facts, with all their circumstances, without evasion or equivocation." *

Again, the law of marine insurance is another branch of our law, for which this superior perfection has been claimed. But the contract of insurance is formed upon principles peculiar to itself; and the common-law doctrine of sales, and the doctrine of insurance, are each perfectly consistent with the facts, and the mutual understanding, which they respectively assume. In an insurance contract, an unreserved disclosure of all the circumstances is required by the nature of the case, and by the mutual understanding of the parties. This will be more fully illustrated by observing, that, in making an insurance contract, the insurer is essentially passive, and is known to act, and professes to act, upon the information of the insured. In this kind of contract, the special facts, upon which the contingent chance is to be computed, lie almost always in the knowledge of the insured only. The insurer trusts to his representation, and proceeds in the confidence, that he does not withhold any circumstance within his knowledge. Even if the suppression happens through mistake, and without any intention of fraud on the part of the insured, the policy is void. The common law punishes only for intentional concealment of defects, or silence respecting them, in cases in which information is not equally accessible to both parties.

The standard of morals, too, set up for the commercial community by the commercial law, is very high. "It is one of the cardinal principles of commercial law, that all its affairs must be conducted with perfect good faith." Again, "It is the aim of all law to secure the observance of good faith in all transactions. The law is said to abhor fraud everywhere, in all its degrees ;it requires of the suppliant for justice, in any form, that he should approach its altars with clean hands. But, where the necessity for the rule is the most pressing, and the temptations to evade it the most severe, the law, perhaps in compassion to human infirmity, employs the greatest vigilance, and exacts the most inviolate

Story's Equity Jurisprudence, Vol. I. pp. 25-30.

integrity. Hence, the prominent rank which this principle holds in mercantile law, and the high and commanding tone of its stern morality in the rules it prescribes for the government and conduct of merchants." In regard to the numerous and important agencies known to mercantile transactions, the law with evident reasonableness requires, "that the trust of every agent be executed with the most scrupulous fidelity and exactness; that he pay careful obedience to the orders of his employers; that he consult their advantage in matters referred to his discretion; that he execute their business with all the despatch that circumstances will admit; that he be early in his intelligence, distinct in his accounts, and punctual in his correspondence." These injunctions apply to every one who undertakes to transact the business of another, or to perform for him any act on which his interest depends. "To remove all temptation from the agent to violate the rule requiring his intercourse with his principal to be open, frank, pure, prompt, and even above suspicion, which is so necessary to the security of trade and commerce, the law allows him, in no case, to enrich himself beyond his stipulated or customary compensation, by the property confided to his care." "The law requires at his hands the most inviolable integrity, and, to preserve him from the temptation to do wrong, it puts it out of his power to do it with success."*

Thus every branch of the law enforces the precepts of good morals, so far as it is in its power to enforce them. But its power is limited; it cannot reach the many duties that belong to the class of imperfect obligations; these must be left to the consciences of individuals. Their nature is such, that human laws do not and cannot undertake to enforce them; and in this respect the rules of no department of the law, are so perfect as the dictates of conscience; and the sphere of morality is more enlarged than the limits of civil jurisdiction.†

3. The principles of Christian morals are recognised as the standard of the rules of law, and every contract or agreement inconsistent with good morals in a very extensive use of that

*

Manuscript Lecture of Professor Greenleaf, of Harvard University. ↑ See p. 31.