demands of plaintiff for an estimate of how much less than $400,000 the building would cost, defendants for the first time informed plaintiff that the cost of the building would exceed $400,000, and that the building when completed would cost $510,000. Thereupon plaintiff stopped work on the building, employed competent and honest experts to make an estimate of the cost of finishing the building, and was by these experts informed that the building completed in a reasonable and proper manner would cost a total sum of not less than $700,000. truism to say that if one party by fraud Plaintiff did not discover the falsity of any of the various statements, representations, promises, and expressions of opinion made by defendants until after the defend- | ants had made an oral statement that the To use a simple illustration: total cost of the building when completed in contemplation the purchase of property would be $510,000, and at which time plain- which he is told is valuable for mining purtiff had already expended $460,000 in the poses, and will buy or refuse to buy upon construction of the building, and to com- the opinion and report of a mining expert plete the building would be compelled to in whom he has confidence, and B repreexpend $230,000 additional. When com- sents to A and prevails upon A to believe pleted, the total value of the land and build- that he has rare skill and experience as ing would not exceed $700,000, while the such mining expert, when in fact he has total cost of the improvements alone would none, and their negotiations end in a writequal, if it did not exceed, $700,000. Of ten contract wherein B is to inspect and the $460,000 so paid out by plaintiff, by investigate the property and report his reason of the deceit practised by defend- opinion as to its value for mining purposes, ants upon the plaintiff, $70,000 was re- and the transaction there ends, A has susceived by the defendants as commissions. tained no substantial injury. The deceit The services of the defendants, for which of B has but induced, the making of an plaintiff was induced to pay $70,000, were executory contract never executed. But if of no value to plaintiff whatsoever. De B, in pursuance of this contract, does make Wolfe refused to accept a lease of the land a favorable report upon the property, upon and to pay interest on the actual cost of the assurance of which A purchases it, the building, and no other person will take and it proves to be worthless, no one, we a lease of the land and pay the plaintiff as think, will question but that B's deceit in rental a sum which will give a reasonable securing the employment is a continuous interest upon the value of the land and deceit, operating to render him liable for reasonable interest upon the actual cost the loss which A has sustained. And this, of the improvements which, by reason of regardless of the fact whether the opinion defendants' deceit, plaintiff was induced upon the value of the property which he and forced to make. Plaintiff has, by rea- gives to A is honest or not. His deceit son of its reliance upon the deliberate false lies back of the report, and is based upon representations, promises, and statements, his false representation of the possession and opinions made by defendants, suffered of special skill and knowledge qualifying detriment and damage in the sum of $300,- | him to make such a report. 000, for which it asks judgment. Logically, the consideration of the case thus presented divides itself into two separate, but intimately related, phases-the first, the deceit practised in inducing plaintiff to enter into the contract; the second, the continuing influence and effect of that deceit, taken with the subsequent false representations and the legal consequences which flow therefrom in the performance of the contract. It is fundamental, of course, that, no matter what the nature of the fraud or deceit, unless detriment has been occasioned thereby, plaintiff has no cause of action. Therefore it is but a So, in this consideration the contract, though executory, having been in part at least executed, the deceit of defendants in procuring the making of the contract and the placing of themselves in a position to reap advantage therefrom is a deceit which runs concurrently with the execution, and contaminates from beginning to end their dealings with plaintiff. It will not do, therefore, to say that up to the time the contract was entered into plaintiff and defendants were dealing at arm's length. True, they were; but it is equally true that but for the representations made, opinions expressed, and promises given, the contract would not have been entered into, and, hav- | mine would be but the expression of his ing been entered into, plaintiff was abso- judgment, and if honestly, though mistakenlutely justified in a continued reliance upon ly, made, of course, no injury cognizable in them until charged in some manner with law, equity, or good morals could result. knowledge of the falsity of one or another But instantly that the expert expresses a of them. dishonest opinion, though it still be but an opinion, he has made himself liable in an action for deceit. Again, as pointed out by Pomeroy (2 Pom. Eq. Jur. 3d ed. § 878): "Wherever a party states a matter which might otherwise be only an opinion, and does not state it as the mere expression of his own opinion, but affirms it as an existing fact material to the transaction, so that the other party may reasonably treat it as a fact, and rely and act upon it as such, then the statement clearly becomes an affirmation of fact within the meaning of the general rule, and may be a fraudulent The four alleged misrepresentations and falsifications leading up to and inducing the making of the contract are: (1) The representation of S. H. Woodruff's great architectural and structural knowledge and skill, when in truth and in fact he possessed none; (2) the positive assertion as a fact, or as an expression of opinion, that the maximum cost of the building such as plaintiff desired to erect would not exceed $300,000; (3) the representation that, if plaintiff would sign the contract, the defendants would without delay prepare full and complete plans and specifications of misrepresentation." the kind provided for in the contract, and would forthwith make an actual detailed estimate of the cost, such estimate "to be accurate to the last nail thereof;" (4) the| representation that if such estimate exceeded $300,000, by the exercise of their knowledge and skill, defendants could and would change and modify the plans and specifications, so as to reduce the cost of the building to a sum not to exceed $300,000. These two illustrations of instances in which expressions of opinion may be made the basis of an action for deceit are sufficient for the purposes of this consideration. If for them support by authority be considered necessary, it will be found in our own state in such cases as Crandall v. Parks, 152 Cal. 776, 93 Pac. 1018, where Professor Pomeroy's language is quoted with approval, and in such other cases as Hedin v. Minneapolis Medical & S. InstiManifestly the effect of the first of these tute, 62 Minn. 146, 35 L.R.A. 417, 54 Am. declarations did not and could not die with St. Rep. 628, 64 N. W. 158; People v. the execution of the written contract. Peckens, 153 N. Y. 576, 47 N. E. 887; WatPlaintiff employed defendants because of son v. People, 87 N. Y. 561, 41 Am. Rep. the false representations of the special skill 397; Simar v. Canady, 53 N. Y. 298, 13 Am. and knowledge of S. H. Woodruff, and not Rep. 523; Hickey v. Morrell, 102 N. Y. only executed the contract because of its 454, 55 Am. Rep. 824, 7 N. E. 321; and belief in his possession of such special skill | Schumaker v. Mather, 133 N. Y. 590, 30 and knowledge, but, beyond peradventure, N. E. 755. Therefore, touching the second it was, during the period of the execution of the contract, justified in relying upon this representation touching Woodruff's special skill and ability. of these alleged false misrepresentations, it is legally a matter of indifference under the pleading whether it be considered the expression of an opinion or the representation of a fact. If the former, then the complaint shows that it was not the expression of an honest opinion, but was dishonestly made with knowledge upon the part of the defendants of its falsity. If the latter, then it was a declaration of a fact which not only was not true, but which defendants, it is charged, knew to be untrue. Treated, then, either as an expression of opinion or as a representation of fact, its influence in inducing plaintiff to employ defendants cannot be denied. The second representation, whether regarded as a representation of fact or as an expression of opinion, was also and obviously of continuous influence and effect. It is, of course, generally speaking, true that an action for deceit cannot be founded upon the mere expression of an opinion. But the qualifications and modifications of this general rule are as important as the rule itself. Those qualifications and modifications are numerous. It is unnecessary to attempt to illustrate them all. But, bearing mind that an expression of an opinion, It is, perhaps, however, proper to add if honestly made, is an expression of what for the guidance of the trial court that we the speaker believes to be a fact, it becomes think the language thus charged to have apparent that, by the expression of a dis- been uttered by defendants imports the honest opinion to one entitled to rely upon declaration of a fact, rather than the exit, deceit is practised, injury may be worked, | pression of an opinion. For, while it is and an action will lie. Thus the opinion true, as is argued on behalf of respondents, of an expert employed to report upon a' that, because of the fact that the plans and specifications had not been settled upon and agreed to, it was an impossibility for any human being to state in terms of dollars and cents what the exact cost of the building would be, and that therefore the language at the most could be but an exexpression of defendants' opinion, the answer is that, in this day of architectural skill and business knowledge of construction in connection therewith, any competent architect, while not able to give in advance of accepted bids a dollar and cent estimate of the cost of a building, can name as matter of fact a figure beyond which the cost will not go. Such a statement is a statement of fact, and it is such a statement that defendants are charged with having made. The third representation requires here no consideration. It is sufficient to say that it is charged that the complete plans and specifications were never presented to plaintiff. Whether defendants were justified in their failure so to do is a subject of later consideration. The fourth representation is manifestly connected with and dependent upon the third, and for the reasons given requires no detailed discussion. Thus we are brought to the transactions between the parties occurring after the execution of the contract, the history of which transactions has been set forth in the foregoing statement of facts. Respondents' position in this regard is twofold: First, that plaintiff had the means of ascertaining before any damage was sustained that the representations complained of were untrue; that it was guilty of laches in not 'employing those means, and therefore cannot be heard to complain. Second, that having knowledge that one representation was false, since the plans and specifications were not forthwith furnished and the detailed estimate was not forthwith given, the plaintiff was put upon inquiry whether all representations might not be false, and from that moment was charged with full notice; that having continued with the contract after such knowledge and means of knowledge, it waived all right it might otherwise have had to charge defendants in an action for deceit. As part of their argument herein respondents urge that by its own showing plaintiff did not exercise ordinary care and prudence, and for its failure so to do has barred itself of any right to relief. Oppenheimer v. Clunie, 142 Cal. 313, 75 Pac. 899. The propositions thus set forth are the most serious and debatable ones in the case. By the complaint it is shown and admitted: (1) That plaintiff paid in excess of $350,000 before its fears were excited that the contract would not be completed within the stated figure of $400,000. (2) It is argued that insistence by plaintiff on the presentation of the plans and specifications, with a detailed estimate of the cost, all as contemplated by the written contract, would have served either to bind defendants or to have established that their statements could not be substantiated. If, therefore, in point of law, it was the duty of plaintiff to have exacted the presentation of these plans, specifications, and estimates, its failure so to do would be a display of a lack of ordinary care and prudence, while, upon the other hand, if these plans and specifications and estimates had been demanded and were not forthcoming, there would be notice of trickery upon the part of the defendants and of a failure to live up to their written agreement. Unquestionably, then, if plaintiff was derelict and culpable in these matters, the inevitable results would be either a waiver of the fraud or estoppel by conduct from charging upon it. But we think the complete answer to all this is found in the fact that the situation of the parties was changed immediately and in most essential particulars from the moment their contract was entered into. From that instant they ceased to be dealing at arm's length, and from that moment the defendants became, as architects, contractors, and superintendents of construction under the pay of plaintiff, its trusted agents. Needham v. Chandler, 8 Cal. App. 126, 96 Pac. 325. Dealing with such trusted agents, plaintiff, as we have said, had the right to rely upon the representations antecedently made and, subsequent to the contract, oft repeated. It had, therefore, the right to rely upon the professed ability and skill of defendants, and upon their statement of fact that, whatever should be finally agreed upon as the plans and specifications, the upset cost of the building would not exceed $300,000, or, with the accepted modifications, $400,000. Still further, by virtue of this agency and relationship of trust and confidence, it became the high duty of defendants to make full disclosure of all the knowledge which they possessed and which it was desirable or important that their principal should have. Thus, as charged, defendants knew that S. H. Woodruff was not a skilled architect, contractor, and constructor. Yet they concealed this knowledge from the principal, to whom it was of great moment. They knew, as charged, that the building could not be constructed for $300,000, and that it would cost a vastly greater sum. This knowledge, likewise, was of the utmost value to plaintiff, and it was knowledge which it was the duty of defendants to disclose to it. Clark, Contr. p. 320; 14 Am. & Eng. Enc. Law, pp. 69 and 70; 2 Kent, | tending that plaintiff has shown no detriCom. p. 582. The test, then, of plaintiff's conduct,the determination of the question as to whether or not it acted with ordinary prudence, is not the test which would be applied between two parties acting at arm's length, each for his own interest. The real test will be found in the answer to the question whether or not plaintiff was guilty of a carelessness such as to bar its right of action for deceit against its trusted agent, dealing with matters peculiarly within the knowledge of the agent and under false representations directly made by that agent, because it did not employ every avenue and means of knowledge open to it to discover that agent's perfidy. Upon reason and authority this question must be answered in favor of plaintiff. Indeed, so plain is the proposition, so strongly must it commend itself to every mind, that we need do no more than cite Marston v. Simpson, 54 Cal. 190, 13 Mor. Min. Rep. 36, and to quote briefly the principle as enunciated in 14 Am. & Eng. Enc. of Law, 2d ed. page 123, where it is said: "When one of the parties to a contract places a known trust and confidence in the other, any misrepresentation by the party confided in with respect to a material fact and constituting an inducement to the other party, by which an undue advantage is taken of him, is regarded as a fraud. The same is true where the circumstances are such that one of the parties must necessarily trust in the representations of the other." So, even if plaintiff could have discovered the falsity of the representations as to upset cost by exacting a delivery of plans and specifications and estimates, since it reposed, and had a right to repose, a special confidence in the integrity and ability of defendants, a confidence induced by the false representations of the defendants themselves, and since under these inducements it entered into a contract involving relationships of trust, it was not guilty of any lack of prudence of which defendants can be heard to complain in not exacting the presentation of these estimates; nor, upon the other hand, did it waive its right of action for the subsequently discovered deceit by having failed to do so. And, finally, in connection with this matter, the payment by plaintiff of an excess over $350,000 before its fears were exicited is explained by the further false representation of defendants that there would be coming to plaintiff large sums by way of rebate upon materials ordered and paid for, but not used. The last proposition which invites attention is that of damages; respondents con ment which, at law or in equity, could afford a foundation for damages. What has already been said disposes of the contention that any such damages were waived by the conduct of plaintiff. Finding itself with an unfinished building upon its hands, but one of two courses was open to it,-to abandon the unfinished building to the elements, or to complete it at reasonable cost. Either course would have been justifiable. The latter unquestionably was the more prudent. In so doing, under the facts and circumstances here set out, it is idle to contend that plaintiff did, or permitted, procured, connived at, or consented to, anything in the nature of a waiver of its right of action. Schmidt v. Mesmer, 116 Cal. 267, 48 Pac. 54. Its procedure under the contract with defendants to its partial performance was, as has been said, justifiable. Its repudiation of defendants and its completion of the building after such repudiation was wholly within its right. Cooley, Torts, § 505; St. John v. Hendrickson, 81 Ind. 350; 14 Am. & Eng. Enc. Law, pp. 171, 172; 20 Cyc. p. 92. Coming thus specifically to the question of damages, it is at once apparent that the allegation that defendants received $70,000, by way of commissions for services procured through fraud and of no value to plaintiff, would, upon adequate proof, entitle it to a recovery in this amount. Still further, upon what may be termed general damages, the averments of the complaint amount to a charge that plaintiff was fraudulently induced and compelled to expend in the construction of a building $300,000 in excess of the $400,000 which alone it contemplated expending, and upon which latter sum alone it can receive any fair or adequate return by way of rental. If, in truth, plaintiff has been so damaged, we think it clear that the law affords it redress. To use an extreme case to illustrate the principle: If a man by fraùd were induced to erect a $700,000 building in the heart of the Sahara Desert, for the use of which building there was absolutely no demand, it would not be an answer to say that the building was economically and honestly constructed and represented a legitimate expenditure of $700,000. So, here we conceive that if plaintiff can establish that, under the circumstances charged, it suffered a loss of $300,000, or any part thereof, it is justly entitled to recover it, if it further establishes that the loss was occasioned in the manner charged. Respondents' objection, therefore, we think, goes rather to evidentiary matters, than to the rule of damage. A large and growing city is not the Sahara Desert, and the burden of proof cast upon plaintiff will necessarily be a neavier one than that which a plaintiff would have to carry in the illustration given. Nevertheless, as we have said, in so far as it can be established that plaintiff was fraudulently induced to expend its moneys for a structure not, as to cost, in accordance with representations, and not capable of returning a fair interest upon the invested capital, respondents have made themselves liable. Spreckles v. Gorrill, 152 Cal. 389, 92 Pac. 1011; Stratton's Independence v. Dines, 68 C. C. A. 161, 135 Fed. 449. For, as Chief Justice Marshall well said, in Russell v. Clark, 7 Cranch, 69, 3 L. ed. 271: "If an act in itself immoral, in its consequences injurious to another, performed for the purpose of effecting that injury, be not cognizable and punishable by our laws, our system of jurisprudence is more defective than has hitherto been supposed." The special demurrer does not call for particular consideration. But for the reasons heretofore given the judgment is reversed, with directions to the trial court to overrule the general demurrer to the complaint. We concur: Melvin, J. R EPORT by the Supreme Judicial Court for Somerset County for the determination by the Law Court of an action brought to recover an amount alleged to be due under a fire insurance policy. Judgment for plaintiff. The facts are stated in the opinion. Messrs. Manson & Coolidge, for plaintiff: Plaintiff had an insurable interest. Cumberland Bone Co. v. Andes Ins. Co. 64 Me. 466; Wainer v. Milford Mut. F. Ins. Co. 153 Mass. 335, 11 L.R.A. 598, 26 N. E. Sloss, J.; Lorigan, J.; 877; Amsinck v. American Ins. Co. 129 Mass. 185; Berry v. American Cent. Ins. Petition for rehearing denied September N. E. 254; Schaefer v. Anchor Mut. F. Ins. 19, 1912. Co. 133 Iowa, 205, 100 N. W. 857, 110 N. The plaintiff's agreement with his mother for occupation, though oral, was valid and MAINE SUPREME JUDICIAL COURT. binding, because he had entered into posses THOMAS E. GETCHELL V. MERCANTILE & MANUFACTURERS' sion, paid rent, made valuable improvements with her knowledge, and so he was entitled in equity to specific performance. Pom. Spec. Perf. § 101; Weaver v. Ship ley, 127 Ind. 526, 27 N. E. 146; Harrell v. Sonnabend, 191 Mass. 310, 77 N. E. 764; 36 Cyc. 680; McGuire v. Murray, 107 Me. 108, 77 Atl. 692. The policy covered the plaintiff's interest. Insurable interest of tenant in | those_tenancies not created by lease, are leased property. This note is confined strictly to the question indicated in its title; namely, the existence and extent of an insurable interest in tenant in the leased property. It does not cover his right to insure the lessor's interest; nor any questions that turn upon the sufficiency of the descriptions of the insured interest or the effect of representations, warranties, or conditions in the policy; so, of course, all questions as to the respective rights of the lessor and lessee in the proceeds of insurance, or as to either's duty to insure for the benefit of the other, are excluded. Cases involving marine insurance, insurance on purely personal property, and all excluded. Cases of insurance on buildings lessee, are also excluded except where the erected on leased ground, but owned by the lessor has some interest, present or prospective, in the building. Under parol agreement; tenant at will. A tenant at will, under a verbal agree ment to pay the taxes and keep the property insured, who takes an insurance policy in his own name, may be treated as the mere agent of the landlord; and if the insurer, with full knowledge of the fact, issues the policy in the agent's name, it cannot escape liability thereon. Schaeffer v. Anchor Mut. F. Ins. Co. 113 Iowa, 652, 85 N. W. 985. |