LURTON, Circuit Judge,
having made the foregoing statement of the case, delivered the opinion of the court.
The plaintiff in error has presented no less than 182 assignments of error, an unnecessarily prodigious number. No less than 41 of these are errors assigned upon the charge of the court. These are all based upon 8 exceptions taken to the charge. Objection is made that these exceptions are too general; that each is an exception covering several distinct propositions; and that, if any proposition be good, the whole exception must fail. Johnson v. Garber, 19 C. C. A. 556, 73 Fed. 523. An exception to a charge should be taken before the jury retire. It should be sufficiently definite to call the judge’s attention to the particular matter objected to, in order that he may have an opportunity to correct it. Neither should an exception cover two distinct propositions, for such an exception is insufficient if either one should prove correct. Railroad Co. v. Jurey, in U. S. 596, 4 Sup. Ct. 566, 28 L. Ed. 527; Bogk v. Gassert, 149 U. S. 25, 13 Sup. Ct. 738, 37 L. Ed. 631; Holloway v. Dunham, 170 U. S. 619, 18 Sup. Ct. 784, 42 L. Ed. 1165; Felton v. Newport, 34 C. C. A. 470, 92 Fed. 470. This objection must be regarded as fatal to most of the exceptions taken to the charge as delivered, though there is one objection which may fairly be regarded as sufficiently definite to base assignments of error upon. That exception is in these words: “We desire to also except to the court’s measure of damages in this case.” What the court had said on this subject was this:
“If the jury should conclude that the plaintiff is entitled to recover anything, then the measure of the plaintiff’s damages would be the difference between the value of the eighty shares of stock on the 31st day of December, 1892, and its value of February 6, 1893, when the plaintiff bought it. Interest may be allowed on this, if the jury see fit. For any depreciation which may have resulted after the latter date the defendants would not be responsible, inasmuch as that depreciation may have been the result of causes with which the defendants had no connection.”
This paragraph was followed by some observations upon parts of the evidence, intended as an application of the proposition of law quoted, which did not involve the statement of any new or distinct proposition. This exception has been criticised, but we think the trial judge could not have misapprehended the scope of the exception, and that the charge on this subject of damages may be regarded as constituting a single subject. In dealing with an objection to an exception this court, in Felton v. Newport, 34 C. C. A. 470, 92 Fed. 470, speaking by Circuit Judge Severens, said:
[935]*935"Tlie charge upon this subject was entire, and bound up in a single proposition. If it was erroneous in any substantial particular, it would seem that the exception would reach the error, especially when it pervades the whole instruction given upon the subject.”
The instruction limited the plaintiff to a recovery of the difference between the value of the shares on December 31, 1892, the day the company was licensed to do business, and February 6, 1893, the date when plaintiff bought his share; in other words, if th'e shares of the company were worth as much on February 6, 1893, as they had been on December 31, 1892, the plaintiff had sustained no loss, although at both dates the shares may have been of much less intrinsic value than the price paid for them. This instruction was erroneous, and must result in a reversal and a new trial.
In its essence Mr. Hindman’s action was a common-law action for deceit. His complaint, in substance, is that he has been led into the purchase of shares in the Columbian Insurance Company, which has proven a most ruinous investment, and that he was induced to buy through reliance upon the certificate made by the defendant bank, upon which that corporation was licensed to do business, and upon like representations made to him when negotiating by the defendant Sullivan, who was at least his nominal vendor. There was evidence tending to show that the defendant Sullivan was one of the promoters and corporators of the company, and an active member of its directory ; and that Sullivan, to induce Hindman to become interested in the company, made representations in respect to the capital stock of the company in substance identical with those found in the certificate made by the cashier of the defendant bank; and that Sullivan, together with Hart, the company’s general manager, referred plaintiff to the bank for a verification of their statements in respect to the company’s paid-in capital. In the former opinion of this court we had occasion to point out some of the principles upon which the bank might make itself liable to Mr. Hindman’s action, and we will not at this point stop to consider how far the evidence produced tended to make a case against either the bank or Mr. Sullivan. If the bank and Sullivan knowingly made misleading and false statements in respect to the financial condition of the insurance company, upon which Mr. Hindman, under the circumstances, was entitled to rely, and if he was induced thereby to purchase shares, what is the measure of the liability of the defendants ? The plaintiff, in reliance upon the representations made by the defendants, has done an act by which he says he has sustained the loss of his entire investment. But does it follow that, because there has been an ultimate loss of his entire investment, that he is entitled to recover that entire loss ? He has paid out $10,000. He has received 80 shares of the company’s stock. The defendants are responsible only for the difference between the value of that which he received and the price he paid. Compensation is all that he. is entitled to. If the stock was worthless wiien he bought it, the price he paid, with interest, is the measure of his recovery. If, oh the other hand, the shares had some intrinsic value, that value should be deducted from the price. That the shares had then and afterwards a market value is of no importance. The plaintiff was under no obli- [936]*936■ gation to'sell, and might hold for an investment; if he saw fit. Smith v. Bolles, 132 U. S. 125, 10 Sup. Ct. 39, 33 L. Ed. 279; Peek v. Derry, 37 Ch. Div. 541; Smith v. Duffy, 57 N. J. Law, 679, 32 Atl. 371. The rule seems to be that the damages recoverable in an action •. for déceit; where the plaintiff has been induced to purchase shares in reliance upon untrue representations, is the difference between the price paid and the real intrinsic value of such shares at the time of their purchase.; and that such value is to be ascertained in the light -.of subsequent events in the history of the company, and not by the market price. Where the subject of the purchase is tangible property, the real actual value and the market value are for 'the most part one and the same. But market sales of corporation shares may not be any real indication of real intrinsic value. In Peek v. Derry, Cotton, L. J., in commenting upon the injustice of measuring intrinsic value by market price of shares, said:
" “I do not know whether there was any market in this case, hut the inarket '.might have been effected by the representations which were made by the , defendants which induced the plaintiffs to act, and which might have induced others to act.”
The ascertainment of the real and intrinsic value of shares in a corporation at a given date presents difficulties which do not occur with respect to more tangible kinds of property. Justice would seem to forbid that in such circumstances the plaintiff should be allowed to gain a benefit by subsequent independent acts tending to depreciate such shares, wholly disconnected with the vice in the company which existed when he acquired his shares. These difficulties were appreciated in Peek v. Derry, cited heretofore; for Lord Cotton, in speaking of subsequent events, said:
“Nor do I think he ought to be. precluded from taking into account the subsequent events. Although the value of the shares is not to be ascertained at the subsequent period, so as to take into account for the benefit of the plaintiff events subsequent which depreciated their value, yet those events, if they show that the company was originally, with the capital which it had got, a company which was worthless, may, in my opinion, be taken into account as evidence of what was the value.of the shares immediately after they were allotted to the plaintiff. So that it may be that, 'useful as this discussion has been in order to elucidate what ought to be the proper time for ascertaining the value, it may ultimately produce no good result to the defendants. But X think it is in accordance with the cases, and in accordance with the principle, that the real value, and not the market value, is to be ascertained immediately after the day when the shares were allotted to the plaintiff.”
■ In the- same case, Sir James Hannen, in dealing with this matter, of damages in actions for deceit in sales of shares, said:
“The question is, how much worse off is the plaintiff than if he had not .'bought the shares? If he had not bought the shares, he would have had his • $4,000 in his pocket. To ascertain his loss, we must deduct from that amount the teal- value of the thing he got. That must be ascertained by ) the light of the events which have happened down to the time of the inquiry, ■ not what the shares might have been sold for, because he was not bound ' to seli them; and subsequent events may show that what the shares migi^t . hdVe- been sold'for was not their true value, but á mistaken estimate of their value;” ■
[937]*937That the price should be reduced by the actual value of the property acquired seems to have the sanction of the supreme court, for in Smith v. Bolles, 132 U. S. 125, 130, 10 Sup. Ct. 39, 40, 33 L. Ed. 279, 282, the court said:
“What the plaintiff paid for the stock was properly put in evidence,* not as the basis of the application of the rules in relation to the difference ' between the contract price and the market or actual value, but as establishing the loss he had sustained in that particular. If the stock had a value in fact, that would necessarily be applied in reduction of the damages.”
The falsity of the certificate issued by the cashier of the defendant bank, upon the strength of which the plaintiff claims the insurance commissioner licensed the company, and 'upon which he claims to have acted in buying this stock, consists in its plain implication that' the capital and surplus of the company had been fully paid in, and' that this capital and surplus was 011 deposit free from all claims and liabilities. The evidence tended to show that probably $100,000 of* the capital stock had never been paid in cash, and that the bank' officials were quite aware that this was so to at least the extent of' $60,000, inasmuch as they knew that the deposit account of the company included proceeds of discounted subscribers’ notes to that extent, upon which the company was then bound as indorser or other-' wise. That the bank had on deposit $248,182.90 was, doubtless,' true, and that this was subject to the check of the company appears to have been also true. That the discounts were absolute, and not' “pretended’’ or “fictitious,” may, in a sense, have been also true. But the ground of action in this case consists in the fact that the capital stock of the company had not been up in cash, as required by law, and that it was not true that $200,000 of the amount on deposit had “been paid in as the full amount of the capital stock of said-' Columbian Eire Insurance Company of America, and $48,182.90 has been paid in as the net surplus of said company.” If any substantial part of-the sum so on deposit arose from the discount of the notes of real or pretended subscribers upon which the insurance company remained liable as indorser or otherwise, then it was not true that $248,182.90 had been paid in as capital and surplus. Whether the discounts made by the bank of such paper were bona fide or “pretended,” the result would be the same. The plain purpose of the Kentucky corporation law was to make it a condition upon which such companies might engage in business that their authorized capital stock should be actually and fully paid in before a license should issue to do business. Shares sold on a credit were not shares paid in, and the discount of notes made by such credit purchasers upon an in-dorsement or'guaranty of the company itself would be a fraudulent evasion of the law, and proceeds arising from such discounts would not be capital stock paid in, but borrowed money masquerading as capital. If, therefore, the jury should believe that the bank knew that a large proportion of the sum on deposit arose from proceeds of such notes, it would know that the deposit did not consist of either capital or surplus, and the certificate would be false and misleading, without regard to whether the discounts were “false,” “pretended,” “fictitious,” or genuine and real. That Mr. Hindman -was partly [938]*938induced to purchase this stock in order to secure an agency is no defense, if his action was in fact influenced by his confidence in the truth1 of the financial condition of the company as shown by this bank statement. It was competent upon the question of the intrinsic value of the shares to show what the ■ true condition of the company was at that date. It was competent to show any and every fact touching'the various contracts under which this deposit of $248,182.90 had been secured. For this purpose it was competent to show the history of the New York certificate of deposit, and the agreement under which that certificate had been obtained, and how it was finally paid. It was also competent to show the inside history of the organization, including the history of each of the discounted notes, and the mode in which they were subsequently taken up or paid off. The true inquiry will be, what was the real, intrinsic value of the share bought by plaintiff? for his'damages must be reduced by deducting that value. Whatever tended to show the want of intrinsic value of shares in a company in the circumstances of this company at the time of the purchase was competent evidence.
The other exceptions to the charge, so far as they bear upon the merits of the case, are insufficient in form to be the basis of an assignment of error. There are, however, a very large number of assignments of error based upon rulings made by the court below during the course of the trial, and a number of other assignments based upon the refusal of the court to give special instructions duly requested, " It would be an unnecessary and unprofitable labor to deal with these assignments seriatim. Some of them are good, and .some are bad. Neither must we be understood as indorsing the charge of the learned court. It seems to lay altogether too much stress upon the charge of conspiracy, and the averments that the deposit was not bona fide subject to the check of the insurance company. The petition of the plaintiff is unnecessarily rich in vigorous averments, many of which are not essential to the maintenance of an action for fraud and deceit. The gravamen of the plaintiff's case, against both the bank and Sullivan, lay in the alleged falsity of the representation that $248,182.90 had been paid in on account of capital stock and surplus. Whether the bank liad conspired with the insurance company, or with Sullivan, or with certain other promoters and managers of the insurance company, for the purpose of foisting on the public an unripe corporation, whose capital stock had not been paid in as required by law, constituted one phase of the plaintiff’s case. But the plaintiff’s case did not altogether depend upon proof of a conspiracy, or upon evidence that the public at large were invited to become purchasers of shares in reliance upon the representations made by either Sullivan or the bank, or both. Facts enough were stated in the plaintiff’s voluminous and redundant petition to justify a recovery, if the jury should believe that the bank, for its own business purposes, knowingly misrepresented the financial condition of the insurance company, in respect to the nature of its account as a depositor, with the intent that the plaintiff should be induced to buy shares. This aspect of the case was not properly put to the jury, and, inasmuch as the case must go back for a new trial, we shall [939]*939briefly indicate the general principles upon which such new trial should proceed, without applying our views to particular specifications of error.
i. The implied authority of the cashier to bind the bank by misrepresentations in the statement or certificate, which is the foundation of the plaintiff’s action against the bank, was more than doubted by the court below, and to this question we shall first address ourselves. That the giving of such a certificate at the instance oí a customer would not be ultra vires the corporate power of the bank, even if it should include a statement of the purpose for which the deposit had been paid in, was decided in our opinion upon the former writ of error. That question need not be reconsidered or the argument repeated. 39 C. C. A. 1, 98 Fed. 562, 48 D. R. A. 210. We did not there consider the authority of the cashier to bind the bank by false statements in such a certificate, if given by him without the direction of the directors, because the questions then decided arose upon a demurrer to a petition which averred that the cashier acted by order of the board of directors. But how can it be said that, without the authority of the board of directors, the cashier’s action in giving such a certificate wrould not be the act of the bank? This is not an action to enforce a contract made by the cashier. Different rules prevail when a suit is upon contract than those applicable in an action for a tort. If the cashier’s act is the act of the bank, the liability of the latter for the tort may be plain, although it might not be liable for a promise by the cashier made under the same circumstances. Morse, Banks, § 171; Thoinp. Corp. §§ 4779, 6283. The cashier is the proper officer to receive deposits and to give certificates or vouchers in respect thereto. Morse, Banks, § 161. If he knew, or assumed to kuowq the source from which the deposit arose, we see no reason why he might not include such a fact in his certificate, if the customer consented or the business of the bank would be thereby subserved. We quite agree with Judge Barr, who heard this case below on a demurrer, who, on this subject, said:
“As the First National Hank had the right to accept the deposits of the insurance company, it would seem to follow, as an incident to receiving de-p; sits, that the cashier might state, orally or in writing, to those authorized to inquire, the amount of the deposits and the nature of the dei>osits, whether on account of capital stock or surplus, or whether a general deposit. That far he was acting under the corporate powers and in the usual course of his business. He had also the corporate power, in the course of his business, to state more than what the books of the bank showed, if he personally knew the fact, or assumed to know the fact, in the performance of his official 'duties, as to the amount of the deposit or the character of tlie deposit. In the absence of any evidence, and assuming that the allegations of the bill are true, it may be presumed that thus far the facts stated by the cashier of the First National Bank in regard to the character of the deposit, whether it was capital stock or capital stock and surplus, was such as the books of the bank showed, or such as the cashier of tlie bank find the custodian of the deposits had a right to know and might communicate. So that, if he knew the deposit was made up by discounts credited, with the intention of swelling the deposit, with a view to deceiving the insurance commission into believing that the capital stock was paid up, It would be within the bank’s corporate powers. The liability In such a case would be because the false representations were made about a thing which [940]*940was, the bank’s business in connection with its corporate powers, and in the lisual course of the business of the cashier of the bank.” 86 Fed. 1012, 1016.
The division into capital stock and surplus was equally within Jhis competency to state to' one entitled to inquire, though of no particular significance to the state insurance commissioner, whose duty was limited to inquiring and certifying that the company’s capital “had been paid in and is possessed by it in money.” Act 1870 (Gen. St. 1888, p. 66, § 7). The material thing to the commissioner was that this certificate, if true, established the conditions which entitled the company to begin business. The mere fact the company had to its credit an amount of money equal to its authorized capital would be an immaterial fact, unless it should also appear that that deposit constituted capital stock paid in and “possessed by it in money.” This was,-therefore, the material thing to which the cashier certified, and if this fact appeared from the books or deposit slips of the bank, or was otherwise known or supposed to be known to the cashier, he, as the custodian of the deposit and chief executive of the bank, was acting within the'apparent scope of his duty and authority, when he gave this statement. That it was sworn to does not affect its character as an act of the bank. It was the certificate of the bank’s cashier, and so officially signed. It was sworn to by the gentleman who filled that office. The jurat was necessary for the purpose of .the state insurance commissioner, and added weight to the representation, to whomsoever it may have been addressed. If the act itself was not so far beyond the general scope of the powers of a 'banking corporation as to carry notice to all of its ultra vires character, and the certificate was given, not for the personal purposes of the. cashier, but in the general course of the bank’s business, the bank would be liable in an action of tort as fully as if made by direction of the board of directors.
■ It is no answer to say that the bank did not authorize a false statement, That may be true. But, as observed by Mr. Justice Willes, in Barwick v. Bank, L. R. 2 Exch. 259, it has “put the agent-in his place to do that class of acts, and it must be answerable for -the maimer in -which the agent has conducted himself in doing the business which it was the act of the master to place him in.” In Gaslight Co. v. Lansden, 172 U. S. 534, 544, 19 Sup. Ct. 296, 300, 43 L. Ed. 543, the supreme court said:
“The result of the authorities is, as we think,-that, in order to hold a corporation liable for the torts of any of its agents, the act in question must be performed in the course and within the scope of the agent’s employment in the business of the principal. The corporation can be held responsible for acts whieli are not strictly within the corporate powers, but which were assumed to be performed for the corporation and by the corporate agents who were competent to employ the corporate powers actually exercised. There need be no written authority under seal, nor vote of the corporation constituting the agency or authorizing the act. But in the absence of evidence of this nature there must be evidence of some facts from which the authority of the agent to act upon or in relation to the subject-matter involved may be fairly and legitimately inferred by the court or jury. Salt Lake City v. Hollister, 118 U. S. 256, 260, 6 Sup. Ct. 1055, 30 L. Ed. 176; Railroad Co. v. Harris, 122 U. S. 597, 609, 7 Sup. Ct. 1286, 30 L. Ed. 1146; Railroad Co. v. Prentice, 147 U. S. 101, 109, 13 Sup. Ct. 261, 263, 37 L. Ed. 97, and cases cited at. page 110, 147 U. S., and. page 264, 13 Sup. Ct.,-37--L: Ed.' 97.” '■
[941]*941The case of Bank v. Scofield, 39 Vt. 590, and Ellerbe v. Bank, 109 Mo. 445, 472, 19 S. W. 241, are instances of corporate, liability for misrepresentations made by an officer of the corporation. Mapes v. Bank. 80 Pa. 163, is not a case which meets our approval. In First Nat. Bank v. Marshall & Illsley Bank, 28 C. C. A. 42, 83 Fed. 725, we held that when a cashier, as a mere act of courtesy, answered an inquiry as to the financial standing- of a customer, the bank would not be liable if the answer should prove false. But the reason of the decision, as stated in the opinion of Judge Clark, was that the cashier was not at the time acting in respect to some interest or business of the bank; his response being a mere voluntary statement, “having no relation to any business transaction with the bank.”
2. To what extent did the plaintiff have a right to rely upon the truth of the representations contained in the cashier’s certificate? Some direct connection between the bank and the plaintiff in error in the communication of this certificate is essential to a recovery. If the statement was addressed to, and intended only to influence the action of, the state insurance commissioner in respect to the licensing of the insurance company, he cannot sustain a recovery, even though he and others may have been led into the purchase of the shares of the insurance company as a consequence of the action of the insurance commissioner in admitting the company to do business upon the representation of the bank’s certificate. The plaintiff’s action, in the aspect of it now under consideration, is for fraud and deceit, and such an action must be bottomed upon false representations made to him, and with intent that he should be influenced thereby. The plaintiff does not sufficiently connect himself with the misrepresentations by the bare fact that he bought stock in a company which was improperly admitted to do business upon representations addressed to the state commissioner. The injury in such case is too remote. In Bedford v. Bagshaw, 4 Hurl. & N. 538, an action was sustained against certain promoters and managers of a company who had made false statements in respect to the capital of the company in order to secure its insertion in the official lists of the stock exchange. The plaintiff, knowing that the rules of the stock exchange admitted no stocks to its lists until two-thirds of the shares-had been paid up, bought on the exchange in reliance that the shares so bought had been paid up accordingly. This proving not to be the case, the plaintiff was suffered to recover, although the false representation had been made to the committee of the stock exchange, and not to the plaintiff directly. The decision was subsequéntly overruled in Peek v. Gurney, L. R. 6 H. L. 377, 397. Eord Chelms-ford, in commenting on the decision, said:
“The actions were brought upon tlio allegation of a false representation made to the plaintiff. But no representation at all was made which reached either his eyes or his ears. From Ills knowing the rules of the stock exchange, he assumed that a certain representation had been made, and acted upon it.”
In Peek v. Gurney a descriptive prospectus was put forth by the directors of a company, in reliance upon which the plaintiff bought shares on open market. It was held.that the prospectus in its terms [942]*942was not an invitation to the public ultimately to become holders of shares, but to join the company at once by becoming original allot-tees of shares, and that only those drawn in by the misrepresentations of the prospectus to become allottees could have a remedy in action for the deceit. In line with Peek v. Gurney is the case of Hunnewell v. Duxbury, 154 Mass. 286, 28 N. E. 267, 13 L. R. A. 733. The law of Massachusetts required the officers of a foreign corporation desiring to do business in the state to file with the commissioner of corporations a certificate showing its financial condition. The plaintiff gave credit upon the faith of the statements in such a certificate, which, had been called to his attention by his own attorney. The Massachusetts court held that the action would not lie, saying:
“To sustain such an action, misrepresentations must either have been made to the plaintiff individually, or as one of the public, or as one of a class to whom they are in fact addressed, or have been intended to influence his conduct in the particular of which he complains. This certificate was not communicated by the defendants or by the corporation to the public or to the plaintiff. It was filed with a state official for the definite purpose of complying with a requirement imposed as a condition precedent to the right of the corporation to act in Massachusetts. Its design was, not to procure credit among- merchants, but to secure the right to transact business in the state. The terms of the statute carry no implication of such a liability.”
That this certificate constituted a part of the files in the office of the state insurance commissioner, and that it was his duty, on demand, to furnish copies to any of the public, or that he might himself, as a state official, include such certificate in his own official publications, is not enough to show that the bank had any other design in giving it than to influence the action of the commissioner. The circumstance that it might thus come to the eye of persons disposed to deal in the company’s shares, and thus induce them to buy, is only evidence to be looked.at with other circumstances tending to show that the bank designed to influence the public at iarge or the plaintiff in particular to.buy the company’s shares. The Kentucky statute carries no implication of civil liability for a false statement, although it does make the giving of a false statement to the commissioner a criminal offense. The right of one of the public who has sustained a loss by the wrongful setting on foot of an insurance company whose capital has not been paid in, and of one who has bought shares or given credit to.such a company in reliance upon the truth of representations made to the commissioner only for the purpose of inducing his action, must depend upon the general principles of law in respect of actions for false representations. It has never been a ground of action that the defendant made a dishonest representation, and that the plaintiff had relied upon it and sustained injury. The moral obligation to speak the truth is not ground for a civil action, unless the misrepresentation was intended to induce the very action by the plaintiff which has 1 resulted in his damage. Cooley, Torts, p. 493; Wells v. Cook, 16 Ohio St. 67, 88 Am. Dec. 436; Barry v. Crosky, 2 Johns. & H. 1. However lamentable the eventual results of a dishonest representation to persons who in reliance thereon, have come to grief, the)'- cannot recoup such losses [943]*943unless they are able in one way or another to bring themselves within the class of persons for whom the representation was intended.
But it was never meant to decide in Peek v. Gurney that a company’s prospectus might not be broad enough to stand not only as an invitation to original allottees, but to all others who might be disposed to deal in the company’s shares. And so the case was explained in Andrews v. Mockford [1896] 1 Q. B. 372, where it was held that if the object of a prospectus is not only to induce applications for original allotments of shares, but also to induce persons to whom it was sent to purchase shares in the market, its function would not be exhausted when all the shares should be subscribed, and that the persons issuing the prospectus would be responsible for the injury sustained in reliance upon the truth of statements therein, known to be false, by any person to whom the paper was sent who-should, in consequence, buy on the market. Scott v. Dixon, 29 Law J. Exch. 62, note, was approved in Peek v. Gurney. The case seems only to be reported in a note to Bedford v. Bagshaw, 4 Hurl. & N. 538. As stated in the opinion of Lord Chelmsford, the action was for a misrepresentation made in a report by the directors to the shareholders of a banking company. Plaintiff was not a shareholder, and, in the absence of other circumstance, could not be regarded as addressed. But it was shown that copies of the report were left at the bank, and were to be had by brokers and all persons applying for them -who desire^ information with a view to the purchase of shares, and that the plaintiffs, through their broker, purchased at the bank a copy of the report, and in reliance bought shares and sustained a loss; a material statement being false. There was a judgment for the plaintiffs. Lord Chelmsford said:
“I do not doubt the propriety of this deeision. The report, though originally made to the shareholders, was intended for the information of all persons who were disposed to deal in shares; and the representation must be regarded as having been made, not indirectly, but directly to each person who obtained the report from the bank, when it was publicly announced it was to be bong-lit, in the same manner as if it had been personally delivered to him by the director.”
The true inquiry is, who did the bank design to influence by its false representation? If the representation here involved was not only made to induce favorable action by the state insurance commissioner, but ivas also intended for. the information of all who should be disposed to deal in the company’s shares, and who should inspect it for information in respect of the company’s capital, it should be regarded as addressed to every such person. So, if the jury should find that the plaintiff was known to the bank as a person disposed to buy such shares, and was referred to this statement for information concerning its capital, they would be justified in finding that the representation ivas addressed to him personally. Such reference of the plaintiff to the certificate would be a repetition of the misrepresentation addressed directly to him, and render it liable, irrespective of the original design and purpose with which the certificate „was given.
[944]*944■3.-Was the misrepresentation knowingly false? One who has been induced by false representations to buy property has open to him no less than three remedies. He may rescind and sue at law for the consideration, he may bring an equitable suit for rescission and obtain full relief, or he may retain what he has received and bring his action for fraud and deceit. The first two kinds of relief lie, as is most evident, only against the vendor. The third will lie against either the vendor or any third person through whose false representations, directly made, the plaintiff has sustained damages. Cook, Corp. § 354, and cases cited. Before the plaintiff can recover in an action of deceit, he must prove two things: that the representation was false, and that the person making it knew it was false. Glasier v. Rolls, 42 Ch. Div. 436; Derry v. Peek, 14 App. Cas. 337; Kountze v. Kennedy, 147 N. Y. 124, 41 N. E. 414, 29 L. R. A. 360, 49 Am. St. Rep. 651; Cook, Corp. § 355; Trimble v. Reid, 97 Ky. 713, 31 S. W. 861. Such an action differs esséntiaíly from one brought for rescission of a contract on the ground of misrepresentation. In the latter kind of suit it is immaterial whether the representation was made dishonestly or not. ■ If the contract was obtained by misrepresentation, however honestly made, it cannot stand. But, when the action is for fraud and deceit, it is not enough to show that the representation was untrue; for, if it was honestly believed to be true, that is'a good defense. Derry v. Peek, cited above. But a representation recklessly made,-without knowledge of its truth, could not be a statement honestly believed. Cooper v. Schlesinger, 111 U. S. 148, 4 Sup. Ct. 360, 28 L. Ed. 382. “Fraud must concur with the false statement' in order to give a ground of action.” Evans v. Collins, 5 Q. B. 804, 820; Pasley v. Freeman, 2 Smith, Read. Cas. 74. Lord Herschell, in Derry v. Peek, thus summed up the authorities:
“ “First, in order to sustain an action'of deceit, there must he proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is' shown that a false representation has been made (.1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or f&As'e: ' Although I have treated the second and third as.distinct cases, X think the third is but an instance of the second; for one who makes a statement under such circumstances can have no real belief in the truth of what he-states. To prevent á 'false < statement being- fraudulent, there must, I think, Always be an honest belief in its truth. And this probably covers the whole, ground; for one who knowingly alleges that which is false has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made.”
■ A representation in respect to a matter, with the intent to in-fkience the conduct of another, implies necessarily the belief of the party making it that the statement is true. If the fact be one within his-means of knowledge, and he have no knowledge of the fact, a jury would be authorized to believe that the statement was knowingly false. Kountze v. Kennedy, 147 N. Y. 124, 41 N. E. 414, 29 L. R. A. 360, 49 Am. St. Rep. 651; Prewett v. Trimble, 92 Ky. 176, 17 S. W. 356, 36 Am. St. Rep. 586; Cole v. Cassidy, 138 Mass. 437, 52 Am. Rep. 284.
[945]*945In respect to evidence tending to establish that the false representation was made knowingly, Lord Herschell, in Derry v. Peek, 14 App. Cas. 337, 375, expressed a view which meets with our hearty approval when he said:
“At the same time I desire to say distinctly that, when a false statement has been made, the questions whether there were reasonable grounds for believing it, and what were the means of knowledge in the possession of the person making it, are most weighty matters for consideration. The ground upon which an alleged belief was founded is a most important test of its reality. I can conceive many cases where the fact that an alleged belief was destitute of all reasonable foundation would suffice of itself to convince the court that it was not really entertained, and that the representation was a fraudulent one. So, too, although means of knowledge are, as was pointed out by Lord Blackburn in Brownlie v. Campbell, 5 App. Cas. 925, a very different thing from knowledge, if I thought that a person making a false statement had shut his eyes to the facts, or purposely abstained from inquiring into them. I should livid that honest belief was absent, and that he was just as fraudulent as if he had knowingly stated that which was false.”
In such an action it is not essential to show that any benefit was derived from the deceit. Endsley v. Johns, 120 Ill. 479, 12 N. E. 247, 60 Am. Rep. 572; 2 Smith, Lead. Cas. pp. 1, 66; Implement Co. v. Chapman, 118 N. Y. 288, 23 N. E. 187. It need not be the sole inducement moving the plaintiff. Cook, Corp. § 355; Morgan v. Skiddy, 62 N. Y. 319. The plaintiff’s action must, however, have been affected materially by the deceit. 118 N. Y. 288, 23 N. E. 187.
4. In respect of the defendant Sullivan, the vendor from whom plaintiff in error bought the shares in question, it is needless to say that, if he made false representations knowingly in respect of the capital of the insurance company to the plaintiff for the purpose of inducing him to buy shares in the company, he would be liable for the damages sustained, if the plaintiff acted in reliance on the truth of the statement. And this would be so whether the plaintiff bought shares from him or from another. Cook, Corp. § 335; Sigafus v. Porter, 28 C. C. A. 443, 84 Fed. 430; Hubbell v. Meigs, 50 N. Y. 480.
5. Upon each of the questions we have considered there was some evidence upon which the plaintiff was entitled to go to the jury. The judgment below must be reversed. It is accordingly ordered that the cause be remanded for a new trial upon principles not inconsistent with this opinion.