Pasley v. Freeman

Brief Fact Summary.

Plaintiff asked Defendant for a credit reference. Defendant lied to Plaintiff. Plaintiff sued Defendant for fraud.

Synopsis of Rule of Law.

If deceit or fraud causes damage to the plaintiff, then it is maintainable in an action against the defendant.

Facts.

Pasley (Plaintiff) was a merchant that asked Defendant for a credit reference on Falch before selling him goods on credit. Defendant lied to Plaintiff about Falch’s credit and Plaintiff then shipped the goods to Falch who never paid for them. Plaintiff then sued Defendant for fraud and misrepresentation. Verdict for Plaintiff. Defendant appealed.

Issue.

Whenever deceit or falsehood is practiced to the detriment of another, will the law give redress?

Held.

Yes. Judgment affirmed.
* (C.J. Lord Kenyon) There are many situations in life, and particularly in the commercial world, where a man cannot by any diligence inform whom he deals; in which cases he must apply to those whose sources of intelligence enable them to give that information. If no injury is occasioned by that lie, it is not actionable; but if it be attended with a damage, it then becomes the subject of an action. It is admitted that Defendant’s conduct was highly immoral, and detrimental to society. And I am of opinion that the action is maintainable on the grounds of deceit in Defendant, and injury and loss to Plaintiff.

Dissent.

(J. Grose) The misrepresentation stated in the declaration is respecting the credit of Falch; Defendant asserted that Plaintiff might safely give him credit; but credit to which a man is entitled is matter of judgment and opinion, on which different men might form different opinions. Whether Falch deserved credit depended on the opinion of many; for credit exists on the food opinion of many.

Concurrence. There are two separate concurring opinions.
* (J. Buller) All that is required of a person in Defendant’s situation is, that he shall five no answer, or that if he do, he shall answer according to the truth as far as he knows. If the answer import insolvency, it is not necessary that Defendant should be able to prove that insolvency to a jury; for the law protects a man in giving that answer, if he does in confidence and without malice. No action can be maintained against him for giving such an answer unless express malice can be proved. From the circumstance of the law giving that protection, it seems to follow, as a necessary consequence, that the law not only gives sanction to the question, but requires that, if it be answer at all, it shall be answered honestly.
* (J. Ashhurst) For the gist of the action is that injury done to Plaintiff, and not whether Defendant meant to be a gainer by it; what is it to Plaintiff whether Defendant was or was not to gain by it; the injury to him is the same.

Discussion.

In this case, four justices discuss Plaintiff’s possible redress. Justice Gross’s opinion is perhaps the best opinion of the four because it addresses the element of justifiable reliance. Defendant represented his view. Under the circumstances, Plaintiff was not justified in relying on Defendant’s statement even if Defendant knew it was false. For fraud there must be a falsehood about a material fact – the falsehood must be relied upon – the reliance must be justifiable and, the reliance must have caused damage. In this case, all the elements for fraud are met, but the element of justifiable reliance.