case it has been paid. (d) But a contract cannot be rescinded without mutual consent if circumstances be so altered by a part execution that the parties cannot be put in statu quo; for if it be rescinded at all, it must be rescinded in toto. (e) The parties to a contract may rescind it at any time before the rights of third persons have intervened; but a resale of the disputed article does not of itself rescind the contract, or destroy the right to damages for non-performance of the contract, to the extent of the loss in a resale, provided the same be made after default and due notice. (f) If the sale be absolute, and the contract remains open and unrescinded, and without any agreement to rescind, the vendee of the unsound article must resort to his warranty, unless it be proved that the vendor knew of the unsoundness, and the vendee tendered a return of the article within a reasonable time. (g)

In South Carolina and Louisiana, the rule of the civil law has stable, and just rule within the contract of the parties. Damages for breaches of contract are only those which are incidental to, and directly caused by, the breach, and may reasonably be supposed to have entered into the contemplation of the parties, and not speculative profits, or accidental or consequential losses, or the loss of a fancied good bargain. Walker v. Moore, 10 B. & C. 416. In Masterton v. Mayor of Brooklyn, 7 Hill, 62, the question of damages was well discussed, and it was held that profits or advantages which were regarded as the direct and immediate fruits of the contract are to be considered as parcel and elements of the contract, and to be allowed. See also Hayden v. Cabot, 17 Mass. 169; Deyo v. Waggoner, 19 Johns. 241; Sedgwick's Treatise, 81-88; 6 Toullier, sec. 286; Flureau v. Thornhill, 2 Blacks 1078; Williams v. Barton, 13 La. 404; Blanchard v. Ely, 21 Wend. 342. But Lord C. J. Denman, in Cox v. Walker, cited in a note to Clare v. Maynard, 6 Ad. & El. 519, and also in the last case, laid down the rule of damages to be the difference between the value of a horse at the sale, considering him to be sound, and the value with the defect complained of, and not the difference between the price of the first purchase and of the actual sale. So in Shannon v. Comstock, 21 Wend. 457, it was held, that in an action to recover damages for non-performance of a contract, the rule of damages was held to be the loss sustained, and not the price agreed to be paid on actual performance. In Cary v. Gruman, 4 Hill, 625, the rule as declared by Lord Denman was adopted, and the price paid was only prima facie evidence of the then value. In O'Conner v. Forster, 10 Watts, 418, on a breach of contract to carry wheat from P. to Philadelphia, the difference between the value of the wheat at P. with the freight added, and the market price at Philadelphia, at the time it would have arrived there if carried according to contract, is the measure of damages. Bracket v. M'Nair, 14 Johns. 170; Davis v. Shields, 24 Wend. 322, to s. p. In Badgett v. Broughton, 1 Kelly, 591, the rule declared by the Supreme Court in Georgia was the difference between the price paid for an article warranted sound, and the value of the article in its unsound condition.

(d) Thornton v. Wynn, 12 Wheaton, 183.

(e) Hunt v. Silk, 5 East, 449.

(ƒ) Sands & Crump v. Taylor, 5 Johns. 395; MacLean v. Dunn, 4 Bing. 722. (g) Thornton v. Wynn, 12 Wheaton, 183.

been followed, and, as a general rule, a sale for a sound price is understood to imply a warranty of soundness against all *481 faults and defects. (h) *The same rule was for many

years understood to be the law in Connecticut; but if it did ever exist, it was entirely overruled in Dean v. Mason, (a) in favor of the other general principle which has so extensively pervaded the jurisprudence of this country. Even in South Carolina, the rule that a sound price warrants a sound commodity was said to be in a state of vibration; and it is not applied to assist persons to avoid a contract, though made for an inadequate price, provided it was made under a fair opportunity of information as to all the circumstances, and when there was no fraud, concealment, or latent defect. (b)

If the article be sold by the sample, and it be a fair specimen of the article, and there be no deception or warranty on the part of the vendor, the vendee cannot rescind the sale. But such a sale amounts to an implied warranty that the article is in bulk of the same kind, and equal in quality with the sample. (c) If the

(h) Timrod v. Shoolbred, 1 Bay, 324; Whitefield v. M'Leod, 2 id. 380; Lester v. Graham, 1 Const. (S. C.) 182; Crawford v. Wilson, 2 id. 353; Dewees v. Morgan, 1 Martin (La.), 1.

(a) 4 Conn. 428.

(b) Whitefield v. M'Leod, 2 Bay, 383. The law in South Carolina seems at last to be conformable to the old general rule. It was held, in Carnochan v. Gould, in the Court of Appeals, 1 Bailey, 179, that a vendor of cotton was not liable for a defect in the quality of the cotton of an unusual character, which extended equally through the bulk, and was fully exhibited in samples. The law in that case would not raise an implied warranty, for there was no fraud, and the buyer was possessed of all the information necessary to enable him to make a correct estimate of the value of the article. In Osgood v. Lewis, 2 Harr. & G. 495, implied warranties upon the sale of chattels, and arising by operation of law, were held to be of two kinds : 1. In cases where there was no fraud, as, that the provisions purchased for domestic use were wholesome, or that the article contracted for in an executory contract, and which the purchaser had no opportunity to inspect, should be salable as such in the market. 2. Where the fraud existed, as if the seller, knowing the article to be unsound, disguises it or represents it as sound.

(c) Parkinson v. Lee, 2 East, 314; Sands v. Taylor, 5 Johns. 395; Bradford v. Manly, 13 Mass. 139 Woodworth, J., in 20 Johns. 204; The Oneida Manufacturing Society v. Lawrence, 4 Cowen, 440; Andrews v. Kneeland, 6 id. 354; Gallagher v. Waring, 9 Wend. 20; Boorman v. Jenkins, 12 id. 566; Waring v. Mason, 18 id. 425; Phillipi v. Gove, 4 Rob. (La.) 315; Civil Code of Louisiana, art. 2449; Moses v. Mead, 1 Denio, 378. In the sale of an article, as hemp in bales, it is held that there is no implied warranty that the interior shall correspond in quality with the exterior of the bales, and if the purchaser is at liberty to open the bales and examine, there is no sale by sample, though the interior does not correspond with the external part. Salisbury v. Stainer, 19 Wend. 159.

article should turn out not to be merchantable, from some latent principle of infirmity in the sample, as well as in the bulk of the commodity, the seller is not answerable. The only warranty is, that the whole quantity answers the sample.

* 6. Of the Duty of Mutual Disclosure.

intentional concealment or suppression of material facts in

the making of a contract, in cases in which both parties have not equal access to the means of information, it will be deemed unfair dealing, and will vitiate and

be some difference in the facility with which the rule applies between facts and circumstances that are intrinsic, and form material ingredients of the contract, and those that are extrinsic, and form no component part of it, though they create inducements to enter into the contract, or affect the price of the article. As a general rule, each party is bound to communicate to the other his knowledge of the material facts, provided he knows the other to be ignorant of them, and they be not open and naked, or equally within the reach of his observation. (a) In the sale of a ship, which had a latent defect known to the seller, and which the

(a) The rule here laid down, though one undoubtedly of moral obligation, is, perhaps, too broadly stated to be sustained by the practical doctrine of the courts. The qualification of the rule is, that the party in possession of the facts must be under some special obligation, by confidence reposed or otherwise, to communicate them truly and fairly. [See Fry, J., in Davies v. London, &c. Ins. Co., 8 Ch. D. 469.] Vide infra, 484, 490.

Pearse v. Pettis, 47 Barb. 276; Downer v. Smith, 32 Vt. 1; [Guckenheimer v. Angevine, 81 N. Y. 394; Mullen v. O. C. R. R. Co., 127 Mass. 86.] So he must act before rights have been acquired by innocent third parties, such as a bona fide purchaser, or the creditors of a company ordered to be wound up under the English acts, of which the defendant was induced to become a member by the directors' fraudulent misrepresentations. Oakes v. Turquand, L. R. 2 H. L. 325; Scholefield v. Templer, 4 De G. & J. 429; Williams v. Given, 6 Gratt. 268; Ohio & M. R. R. v. Kerr, 49 Ill. 458; [Morrison v. Universal, &c. Ins. Co., 8 L. R. Ex. 197; Stone v. City, &c. Bank, 3 C. P. D. 282; Cundy v. Lindsay, 3 App. Cas. 459; Attenborough v. London, &c. Co., 3 C. P. D. 450; Babcock v. Lawson, 5 Q. B. D. 284.] To make the suppression of truth fraudulent, there must be a duty to communicate it. (See n. (a).) Thus, it is fraud for the seller of a check not to disclose that another check of the same maker on the same bank had just been protested. Brown v. Montgomery, 20 N. Y. 287. So, if there be a defect in an article known to the manufacturer, and which cannot be discovered on inspection, he is

bound to point it out; but if there be a defect which is patent, and of which the purchaser is as capable of judging as the manufacturer, he is not bound to call the attention of the purchaser to it; and when the purchaser takes the article without looking at it, although he has the chance, it has been held immaterial that a patent defect was so far concealed as to be only visible on careful inspection. Horsfall v. Thomas, 1 H. & C. 90; post, 484. See Keates v. Cadogan, 10 C. B. 591, explaining Hill v. Gray, cited in the text below; Paddock v. Strobridge, 29 Vt. 470. Equity would not interfere, if the party was not misled by the representation. Story, Eq. § 202; Nelson v. Stocker, 4 De G. & J. 458. (See 490, n. 1.) But Horsfall v. Thomas is thought to go too far by Cockburn, C. J., in Smith v. Hughes, L. R. 6 Q. B. 597, 605. As to the purchaser's right to remain silent, see 490, and n. 2. It has been said that to maintain a defence to an action for the price of goods, on the ground of the vendor's deceit, the same facts must be proved which would be necessary to maintain an action for deceit in the sale of goods. King v. Eagle Mills, 10 Allen, 548. As to fraudulent representations generally, see 490, n. 1.

buyer could not by any attention possibly discover, the seller was held to be bound to disclose it, and the concealment was justly considered to be a breach of honesty and good faith. (b) So, if one party suffers the other to buy an article under a delusion created by his own conduct, it will be deemed fraudulent, and fatal to the contract; as, if the seller produces an impression upon the mind of the buyer, by his acts, that he is purchasing a picture belonging to a person of great skill in painting, and which the seller knows not to be the fact, and yet suffers the impression to remain, though he knows it materially * 483 enhances the value of the picture in the mind of the Luyer. (a) One party must not practise any artifice to conceal defects, or make any representations for the purpose of throwing the buyer off his guard. The same principle had been long ago declared by Lord Hardwicke, when he stated, (b) that if a vendor, knowing of an incumbrance upon an estate, sells, without disclosing the fact, and with knowledge that 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. It was upon this ground that Lord Mansfield must have considered, (c) that selling an unsound article, knowing it to be unsound, for a sound price, was actionable. It is equivalent to the concealment of a latent defect; and the ground of action is the deceit practised upon the buyer. (d) The same

(b) Mellish v. Motteux, Peake's Cases, 115. This case was afterwards overruled by Lord Ellenborough, in Baglehole v. Walters, 3 Campb. 154, and the latter decision confirmed in Pickering v. Dowson, 4 Taunt. 779; but it was upon another point, respecting the effect of a sale with all faults; and the principle of the decision, as stated in the text, remains unmoved. The same principle was urged in Southerne v. Howe, 2 Rol. 5; and it was stated that if a man sells wine knowing it to be corrupt, an action of deceit lies against him, though there be no warranty.

(a) Hill v. Gray, 1 Starkie, 434; Pilmore v. Hood, 5 Bing N. C. 97. (b) 1 Ves. 96.

(c) Stuart v. Wilkins, Doug. 18.

(d) Hough v. Evans, 4 M'Cord, 169. If a person having the legal title to property, stands by and acquiesces in the sale of it by another person claiming, or having color of title, he will be estopped afterwards in asserting his title against the purchaser. Qui tacet, consentire videtur. Qui potest et debet vetare, jubet si non vetat. Wendell v. Van Rensselaer, 1 Johns. Ch. 354; Storrs v. Barker, 6 id. 166;