tract, and may therefore be used. If on the other hand there was no mistake in the writing, but the alteration still was honestly intended to correct a supposed mistake, the writing may, it seems, at least upon restoration to its original form, be used and the alteration explained; for there was no intention to change, and in reality there was no change from, its true character as there was in the case first considered.2 This is one of the exceptions to the rule that the fraud of a third person cannot be alleged against an opponent. Another exception arises where the fraud was of a nature, not to destroy an existing contract, but to prevent one from coming into existence. This is a very different case from fraud arising in the ordinary way of misrepresentation. Fraud of this latter kind does not prevent the coming together of the minds of the parties; the parties contract, though they might not have contracted had the truth been known to both. In fraud of the kind now referred to however there is no agreement at all, or none upon the same subject matter, which is the same thing. Cases of this kind occur where a person surreptitiously or otherwise fraudulently substitutes one writing for another which the defrauded party is thus induced to sign, or where some incomplete or undelivered paper is found or wrongfully taken bearing the signature of another, and fraud 1 McRaven v. Crisler, 53 Miss. 542; Clute v. Small, 17 Wend. 238; Boyd v. Brotherson, 10 Wend. 93; Hervey v. Harvey, 15 Maine, 357. See Robinson v. Reed, 46 Iowa, 219. Contra, Miller v. Gilleland, 19 Penn. St. 119, by a divided court. 2 Horst v. Wagner, 43 Iowa, 373; Krause v. Meyer, 32 Iowa, 566. But it would be otherwise where the alteration, though not fraudulent, was not made to correct a supposed mistake; e. g. where a new maker is added, without consent. Draper v. Wood, 112 Mass. 315; Fay v. Smith, 1 Allen, 477; Aldrich v. Smith, 37 Mich. 468; Evans v. Foreman, 60 Mo. 449. Still an action upon the consideration could, it seems, be maintained in such a case. Booth v. Powers, 56 N. Y. 22, 31; Meyer v. Huncke, 55 N. Y. 412; Clute v. Small, 17 Wend. 238; Clough v. Seay, 49 Iowa, 111; Vogle v. Ripper, 34 Ill. 100; Matteson v. Ellsworth, 33 Wis. 488; Eckert v. Williams, 59 Iowa, 545; Robinson v. Reed, 46 Iowa, 219. See the last case in regard to the burden of proof, to wit, that the party producing the altered instrument must show the alteration to have been innocent and proper in purpose, or that it was made by a stranger. ulently completed, if incomplete, and put into circulation. No one can compel the defrauded party to recognize in any way the validity of his signature in such a case; though it would be otherwise if he had once delivered the paper, even with instructions not to negotiate it, or not to negotiate it except in a certain event that never happens. A well known illustration of the fraudulent substitution of one paper for another may be given. The defendant, whose name appeared upon the back of a negotiable bill of exchange, was induced to put his name there by the fraudulent representation of the acceptor that he was signing a guaranty, in renewal of a guaranty formerly signed by him. In an action against him as indorser by a bona fide holder for value the jury was directed that if the defendant's signature to the document was obtained upon a fraudulent representation that it was a guaranty, and the defendant signed it without knowing that it was a bill, and under the belief that it was a guaranty, and if he was not guilty of any negligence in so signing the paper, he was entitled to the verdict.' And this was held by the Court of Common Pleas of England a proper direction.1 A third exception to the rule in regard to fraud committed by strangers to the suit arises in the case of persons taking with notice of the fraud, especially purchasers. He who takes title to property with knowledge or notice that that title is tainted with fraud takes it with no better right than he had who was guilty of the fraud; that is, the fraud of the actual wrong-doer may, on the question of title, be alleged against his successor so taking the property. This subject will be developed in a later chapter under Constructive Fraud. 1 Foster v. Mackinnon, L. R. 4 C. P. 704. Further see the collection of cases ante, pp. 73, 74, note. CONSTRUCTIVE FRAUD. INTRODUCTORY. WE have seen that to certain cases falling short of (real) fraud the law has given the name 'constructive' fraud, because, in certain particulars, it treats them as if they were cases of fraud.1 Of such cases two divisions may be made, in one of which the burden of proof, instead of resting upon the plaintiff as in proper cases of fraud, rests upon the defendant; in the other the burden rests, in accordance with ordinary principles, upon the plaintiff, the offence however turning, not upon the original purpose, but upon conduct subsequent. The first division embraces transactions between parties in fiduciary, confidential, or kindred relations. CHAPTER I. FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS. I. FIDUCIARY RELATIONS. § 1. THE GENERAL PRINCIPLE. WHEN a party, complaining of a particular transaction, such as a gift, sale, or contract, has shown to the court the existence of a fiduciary or a confidential relation between himself and the defendant, and that the defendant occupied the position of trust or confidence therein, the law raises a suspicion or, it is often said, a presumption of fraud; a suspicion 1 Ante, pp. 10-13. |