MISREPRESEN TATION. "One of the parties may have been led to form untrue conclusions respecting the subject mat ter of the contract by statements innocently made, or facts innocently withheld by the other. This is Mis representation." (Anson on Cont. p. 121.) Misrepresentation is to be distinguished from fraud; and from such a representation of facts as amounts to a promise, which, if proven untrue, allows the contract to he formed, but gives a right of action for the breach of the promise. We are now treating of the misrepre sentations which affect the validity of the contract and not of those which affect the performance of a con tract. Fraud voids the contract and also gives an ac tion for the wrong or deceit; misrepresentation merely invalidates the contract. It is fraud, and involves the action of deceit, if there is knowledge of the false state ment, though no dishonest motive is present. (Polhill v. Walter, 3 E. & Ad. 114; Bartlett v. Tucker, 104 Mass. 636; McCurdy v. Rogers, 21 Wis. 197.) So statements, if intended to be acted upon, which are made recklessly and without reasonable grounds of be lief, constitute fraud. (Walsh v. Morse, 8o Mo. 568.) Misrepresentations made by one party to another, or innocent non-disclosure of facts, only affects the valid ity of certain contracts in which the greatest of good faith between the contracting parties is required. An son mentions contracts of marine or fire insurance, contracts for the sale of land, and for the purchase of shares in companies as contracts in which such mis representation is fatal to the formation of the contract. (Anson on Cont. p. 137).
The contracts which are affected in their formation by misrepresentation or non-disclosure, are of a na ture that one of the parties must rely upon information furnished by the other, and more confidence must of necessity be placed in the party making the disclo sures; hence the contracts are said to be "uberrimae fidei," that is, of the most abundant good faith.
Marine Insurance. In McLanahan v. Universal Ins. Co. i Pet. 170, the court, speaking of marine insur ance, said: "The contract of insurance is one of mutual good faith; and the principles which govern it are those of enlightened moral policy. The underwriter must be presumed to act upon the belief that the party procuring insurance is not, at the time, in possession of any fact material to the risk, which he does not dis close." Every fact which would influence the accept ing or rejection of the risk by the undenvriter, is ma terial, and must be communicated; any concealment, though resulting from accident, or mistake, will, when material, avoid the policy. (Lexington Ins. Co. v. Paver, 16 Ohio, 334; Knowlton's Ed. of Anson on Contract, p. 19on.) Fire Insurance. "In the contract of fire insurance the description of the premises appears to form a rep resentation on the truth of which the validity of the contract depends." (Anson, Cont. p. 148.) But it is said that not so high a degree of good faith and dili gence is required in fire insurance as in marine insur ance, and the rule of marine insurance that the insured is bound, without inquiry, to disclose every fact within his knowledge material to the risk, does not apply in its full extent. (Wood on Fire Ins. Sec. 196n; Burritt v. Saratoga Fire Ins. Co. 5 Hill, 192.) And now where applicants for insurance fill out the inquiries submitted, in writing, an innocent failure to communicate facts about which the insured was not asked, will not avoid the policy of insurance. (Washington Mills Co. v. Weymouth Ins. Co. 135 Mass. 5o5; Browning v. Home Ins. Co. 71 N. Y. 548.) Life Insurance. "The contract of life insurance differs from those of marine and fire insurance in this respect. Untruth in the representations made to the insurer as to the life insured will not affect the validity of the contract unless they be made fraudulently, or unless their truth be made an express condition of the contract." (Anson on Cont. p. 149; Wheelton v. Har disty, 8 E. & B. 232; Schwarsbach v. Pro. Union, 25 W. Va. 655.) But in Vose v. Eagle Life & Health Ins. Co. 6 Cush. 42, it is said: "An untrue allegation of a material fact will avoid the policy, though such allega tion or concealment be the result of accident or neg ligence or design." The rule seems to be that if the representations were material to the risk and falsely made, they avoid the policy. (Campbell v. New Eng. Ins. Co. 98 Mass. 396.) Sale of Land. "In agreements of this nature a mis description of the premises sold or the terms to which they are subject, though made without any fraudulent intention, will vitiate the contract." (Anson on Cont. p. 15o.) In this case the contract is not strictly "uber rimae fidei," and though latent defects in the title should be disclosed by the vendor, yet "if the vendor has said or done nothing to throw the purchaser off his guard or to conceal a patent defect, there is no fraudu lent concealment on the part of the vendor; the pur chaser has an opportunity of inspecting and judging for himself; and the principle of caveat emptor ap plies." (2 Add. on Cont. 914.) Purchase of Shares in Companies. "Those who is sm.: a prospectus holding out to the public the great advantages which will accrue to persons who will take shares in a proposed undertaking, and inviting them to take shares on the faith of the representations there in contained, are bound to state everything with strict and scrupulous accuracy, and not only to abstain from stating as fact that which is not so, but to omit no one fact within their knowledge the existence of which might in any degree affect the nature, extent or quality of the privileges and advantages which the prospectus holds out as inducements to take shares." (Per Kin dersley, V. C. in Brunswick & Canada Ry. Co. v. Mug geridge, i Dr. & Sm. p. 381.) It is to be observed that expressions of opinion, and such commendatory expressions as are ordinarily used to induce purchasers to buy are not treated as fatal rep resentations, though occurring in the special contracts just mentioned, and more extravagant than correct. (Anson, Cont. pp. 152-3.)