Gross v. Sussex Inc.

ROBERT M. BELL, Judge. We granted certiorari to consider whether purchasers of real property may recover against the builder-seller and its agent, a real estate agency, in an action for deceit and negligent misrepresentation based on false statements, the accuracy of which the purchasers did not immediately investigate. In an unreported opinion, the Court, of Special Appeals affirmed the trial court’s grant of summary judgment in favor of the defendants, thus, holding that they may not. I. In April, 1987, the petitioners, Thomas and Ann Louise Gross (“the Grosses”), and the respondent, Sussex, Inc. (“Sussex”), a closely-held corporation specializing in building new single family residential homes in St. Mary’s County, executed a contract for Sussex to build the petitioners a home in the Carroll Manor subdivision.

The petitioners became aware of the property through Tim Brubaker, a sales associate for the respondent, Nyman Realty, Inc. (“Nyman”), a licensed real estate agency handling the listing for the subdivision. After Brubaker showed them a plat and house design proposed by Sussex, the petitioners submitted a standard new home form contract, which Brubaker completed and Sussex ratified, through its sole owner, respondent James Thomas, on April 6, 1987. The contract, which did not include a “time is of the essence” clause, provided that Thomas Gross, a full-time Prince George’s County police detective, who also had a Maryland real estate sales license, would receive one-half of the sales commission. ²⁵² The petitioners alleged in their complaint that, prior to the execution of the contract, Brubaker represented that Sussex had the permits to start building the house, that the site had been staked off, and, although the date of settlement was August 1, 1987, that construction could be completed by June 30, 1987. On April 10, 1987, shortly after the contract was executed, the petitioners met with Brubaker and respondent William Thomas, Sussex’s construction supervisor, at the construction site.

Thomas confirmed Brubaker’s earlier representations: that the building permits had been obtained; that construction could begin immediately; and that, although it could be completed as early as June 30, 1987, the home would be completed by the settlement date. Based on these representations, the Grosses listed their Charles County residence for sale. It was sold on April 17, 1987, with settlement to occur 120 days thereafter. Completion of the house was delayed beyond the August 1, 1987 settlement date.

Construction having yet to commence as of July 1, 1987, the petitioners met with William Thomas in mid-July. They informed him that it was necessary for them to have a firm completion date in order to decide where to enroll their children in school for the upcoming school year. They were told that the house would be finished by the third or fourth week in' September. Based on what they thought was a firm completion date, the petitioners enrolled their three children in St. Mary’s County schools.

In further reliance on that representation, the petitioners attempted to rent a house in St. Mary’s County. When that effort proved unsuccessful, they rented a temporary residence in Charles County. The September completion date was not met. The petitioners alleged that they were, therefore, required to transport their children to and from Charles County, a distance of more than 100 miles per day, every school day for the entire school year.

The petitioners discovered, in October 1987, that the subdivision had neither been approved nor recorded in the county record office until October 2, 1987. Building permits for the construction of their home were not issued until October 20, ²⁵³ 1987. Sussex promised that the house would be completed within two months of the issuance of building permits. It was not.

At a meeting of the parties in December, 1987, Sussex promised to have the house under roof by December 28, 1987 and completed forty-five to sixty days later. As it turned out, the house was not habitable until September, 1988. Settlement on the property occurred September 29, 1988. A year after settlement, the petitioners filed suit in the Circuit Court for Prince George’s County, naming as defendants Sussex, its officers, James Thomas and William Thomas, and Nyman.

Sussex 1 was sued for breach of contract, fraud, and negligent misrepresentation, while Nyman was sued only for fraud and negligent misrepresentation. The respondents answered the complaint, cross-claimed against each other, and subsequently moved for summary judgment. The respondents’ first motions for summary judgment were denied. Their subsequent motions were granted as to the fraud and negligent misrepresentation counts, the circuit court ruling: The bottom line, my observation is that clearly the [petitioners] establish a lie, establish a false statement.

But just as clearly the law requires more than just a false statement, or a lie. In other words, a lie is not actionable. In this case particularly there is no evidence from which a rational reasonable finder of facts, that is a jury, could conclude that the [respondents] made the lie with the intent to take something illegally or unlawfully from the [petitioners]. So I am compelled by my interpretation of the law to render a judgment on those counts in favor of the [respondents].

The Court of Special Appeals affirmed. Judgment for costs were eventually entered in favor of each respondent and the petitioners appealed. 2 ²⁵⁴ Like the trial court, the intermediate appellate court concluded that the petitioners did not generate an issue of fact as to the respondents’ intent to defraud the petitioners. Alternatively, 3 and equally applicable to the negligent misrepresentation counts, the Court of Special Appeals opined that, “[e]ven if intent is an issue which should be submitted to a jury ...,” the petitioners did not establish that they had the right to rely on the respondents’ representations. The court asserted, “Appellants had the opportunity to weigh the statements [made by representatives of Nyman and Sussex] and Thomas Gross’s 12 years of experience as a real estate agent gave him special knowledge and competence.” It observed: It appears that appellants were aware, or should have been aware, of the actual status of construction, including the delays.

Appellants were not merely at the mercy of Sussex and Nyman because Thomas Gross was in as good position as they to understand the prerequisites of new housing construction. The court concluded that the petitioners did not justifiably rely to their detriment on the information the respondents gave them. In addition, the court held that, for purposes of ²⁵⁵ the negligent misrepresentation claims, Nyman was in a different position than Sussex. There being no agency relationship between them, Nyman owed no duty of care to the petitioners, the court asserted.

We granted the petitioners’ Petition for Writ of Certiorari.

II

The review of the grant of summary judgment involves the determination whether a dispute of material fact exists, Beatty v. Trailmaster, 330 Md. 726, 737 , 625 A.2d 1005, 1011 (1992); Heat & Power Corp. v. Air Prod. & Chem., Inc., 320 Md. 584, 591 , 578 A.2d 1202, 1206 (1990); Arnold Dev., Inc. v. Collins, 318 Md. 259, 262 , 567 A.2d 949, 951 (1990); Bachmann v. Glazer & Glazer, Inc., 316 Md. 405, 408 , 559 A.2d 365, 366 (1989); King v. Bankerd, 303 Md. 98, 111 , 492 A.2d 608, 614 (1985), and “whether the trial court was legally correct.” Heat & Power Corp., 320 Md. at 592 , 578 A.2d at 1206 (1990) (citations omitted). In accordance with Maryland Rule 2-501(e), if the motion and response show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law, the trial court shall enter summary judgment for the moving party forthwith. The purpose of the summary judgment procedure is not to try the case or to resolve factual disputes; rather it is to decide whether there is an issue of fact sufficiently material to be tried. See Coffey v. Derby Steel Co., 291 Md. 241, 247 , 434 A.2d 564, 568 (1981); Berkey v. Delia, 287 Md. 302, 304 , 413 A.2d 170, 171 (1980).

When the moving party has provided the court with sufficient grounds for summary judgment, the opposing party must demonstrate that there is a genuine dispute of material fact by presenting facts that would be admissible in evidence. Beatty, 330 Md. at 737 , 625 A.2d at 1011 . That showing requires more than general allegations that do not show facts in detail and with precision. Id. at 738 , 625 A.2d at 1011 .

See Lynx, Inc. v. Ordnance Products, 273 Md. 1, 7-8 , 327 A.2d 502, 504 (1974); Brown v. Suburban Cadillac, Inc., 260 Md. 251, 255 , 272 A.2d 42, 44 (1971). ²⁵⁶ In determining whether a genuine dispute of material fact exists and, if not, what the ruling of law should be, the court examines the pleadings, admissions, and affidavits, etc., Leonhart v. Atkinson, 265 Md. 219 , 220 289 A.2d 1, 2 (1972), resolving all inferences to be drawn therefrom against the moving party. Honaker v. W.C. & A.N. Miller Dev. Co., 285 Md. 216, 231 , 401 A.2d 1013, 1021 (1979); Merchants’ Mtg. Co. v. Lubow, 275 Md. 208, 217 , 339 A.2d 664, 670 (1975).

In other words, all inferences must be resolved against the moving party when determining whether a factual dispute exists, even when the underlying facts are undisputed. Liscombe v. Potomac Edison Co., 303 Md. 619, 621 , 495 A.2d 838, 839 (1985); Berkey, 287 Md. at 305 , 413 A.2d at 171 ; Brewer v. Mele, 267 Md. 437, 441-42 , 298 A.2d 156, 159-60 (1972); Washington Homes, Inc. v. Interstate Land Dev. Co., 281 Md. 712, 716 , 382 A.2d 555, 557 (1978). “A material fact is a fact the resolution of which will somehow affect the outcome of the case.” King, 303 Md. at 111 , 492 A.2d at 614 (citing Lynx, Inc. v. Ordnance Prod., Inc., 273 Md. at 8 , 327 A.2d at 509 (1974)). “A dispute as to a fact ‘relating to grounds upon which the decision is not rested is not a dispute with respect to a material fact and such dispute does not prevent the entry of summary judgment.’ ” Salisbury Beauty Schools v. State Bd. of Cosmetologists, 268 Md. 32, 40 , 300 A.2d 367, 373 (1973), quoting Rooney v. Statewide Plumbing, 265 Md. 559, 564 , 290 A.2d 496, 498-499 (1972); Parklawn v. Nee, 243 Md. 249, 254 , 220 A.2d 563, 566 (1966); Daniel v. Kensington Homes, Inc., 232 Md. 1, 13 , 192 A.2d 114, 121 (1963). Ordinarily, summary judgment is inappropriate when intent and motive are critical to the proof of a case.

Poller v. Columbia Broadcasting Co., 368 U.S. 464, 473 , 82 S.Ct. 486, 491 , 7 L.Ed.2d 458, 464 (1962). This Court has recognized that “[cjases that primarily raise issues of fraud or intent are ... generally ill-suited for summary judgment due to the need for greater than usual factual development.” Berkey v. Delia, 287 Md. 302, 306 , 413 A.2d 170, 172 (1980). See DiGrazia v. County Executive, 288 Md. 437 , 418 A.2d 1191, 1196 (1980). ²⁵⁷ See also Coffey v. Derby Steel Co., 291 Md. 241, 247 , 434 A.2d 564, 568 (1981) (“Credibility is not an issue to be resolved on summary judgment.”). Nevertheless, even in cases involving intent and motive, if the prerequisites for summary judgment are met — there is no material dispute of fact — summary judgment may be granted.

Berkey, 287 Md. at 306 , 413 A.2d at 172 ; Driver v. Potomac Electric Power Co., 247 Md. 75, 79 , 230 A.2d 321, 325 (1967).

III

A. To present a prima facie case of fraud, in Maryland, it must be pleaded and proved: (1) that a false representation was made by a party; (2) that its falsity was known to that party or that the misrepresentation was made with such reckless indifference to truth as to impute knowledge to the party; (3) that the misrepresentation was made for the purpose of defrauding some other person; (4) that the person not only relied on the misrepresentation but had a right to rely upon it with full belief in its truth, and that the person would not have done the thing from which the damage resulted if the misrepresentation had not been made; and (5) that the person suffered damage directly resulting from the misrepresentation. Everett v. Baltimore Gas & Elec., 307 Md. 286, 300 , 513 A.2d 882, 889 (1986). See Martens Chevrolet v. Seney, 292 Md. 328, 333 , 439 A.2d 534, 537 (1982), Suburban Property Mgmt. v. Johnson, 236 Md. 455, 460 , 204 A.2d 326, 329 (1964); Fowler v. Benton, 229 Md. 571, 578-79 , 185 A.2d 344, 349 (1962); Fegeas v. Sherrill, 218 Md. 472, 476-77 , 147 A.2d 223, 225 (1958); Schmidt v. Milhauser, 212 Md. 585, 592 , 130 A.2d 572, 575 (1957); Gittings v. Van Dorn, 136 Md. 10, 15-16 , 109 A. 553, 554 (1920); Buschman v. Codd, 52 Md. 202, 207 (1879); Herbert v. Saffell, 877 F.2d 267, 272 (4th Cir.1989) (applying ²⁵⁸ Maryland Law); Bishop v. E.A. Stout Realty, 182 F.2d 503, 504-505 (4th Cir.1950) (applying Maryland Law). To be sufficient, the evidence must be such as to constitute proof by clear and convincing evidence.

Everett, 307 Md. at 300 , 513 A.2d at 890 . See also Peurifoy v. Congressional Motors, Inc., 254 Md. 501, 517 , 255 A.2d 332, 340 (1969); Loyola Fed. Sav. & Loan Ass’n v. Trenchcraft, Inc., 17 Md.App. 646 , 648 303 A.2d 432, 434 (1973). Moreover, the false statement 4 must be of a material fact. Carozza v. Peacock Land Corp., 231 Md. 112, 121 , 188 A.2d 917, 921 (1963).

In Carozza , we defined materiality as follows: In a business transaction, reliance upon a misrepresentation of a fact, intentionally misrepresented or otherwise, is justifiable only if the fact misrepresented is material. A fact is material if its existence or non-existence is a matter to which a reasonable man would attach importance in determining his choice of action in the transaction, or the maker of the misrepresentation knows that its recipient is likely to regard the fact as important although a reasonable man would not so regard it. Id. at 121 , 188 A.2d at 921 . See also Zimmerman et al. v. Kent et al., 31 Mass.App.Ct. 72 , 575 N.E.2d 70, 74 (1991) (representation that the septic system would require raising ground at least three feet, as opposed to six to nine inches, is sufficient to find representation material).

Thus, making a promise as to a matter material to the bargain with no intention to fulfill it is an actionable fraud. Tufts v. Poore, 219 Md. 1, 11 , 147 A.2d 717, 723 (1959); Finch v. Hughes Aircraft ²⁵⁹ Co., 57 Md.App. 190, 233 , 469 A.2d 867, 888 (1984); Bagel Enter., Inc. v. Baskin & Sears, 56 Md.App. 184, 203 , 467 A.2d 533, 542-43 (1983). The tort of negligent misrepresentation, first recognized in Maryland more than fifty years ago, see Virginia Dare Stores v. Schuman, 175 Md. 287, 291-92 , 1 A.2d 897, 899 (1938), is actionable where it is shown that: (1) the defendant, owing a duty of care to the plaintiff, negligently asserts a false statement; (2) the defendant intends that his statement will be acted upon by the plaintiff; (3) the defendant has knowledge that the plaintiff will probably rely on the statement, which, if erroneous, will cause loss or injury; (4) the plaintiff, justifiably, takes action in reliance on the statement; and (5) the plaintiff suffers damage proximately caused by the defendant’s negligence. Martens Chevrolet, 292 Md. at 337 , 439 A.2d at 539 .

See also Weisman v. Connors, 312 Md. 428, 444 , 540 A.2d 783, 791 (1988); Vance v. Vance, 286 Md. 490, 496 , 408 A.2d 728, 731 (1979); St. Paul at Chase Corp. et al. v. The Mfr. Life Ins. Co. et al., 262 Md. 192, 216 , 278 A.2d 12, 25-26 (1971); Chesapeake Homes, Inc. et al. v. McGrath, et ux., 249 Md. 480, 488-89 , 240 A.2d 245, 249-50 (1968); Brack v. Evans, 230 Md. 548, 552-53 , 187 A.2d 880, 882-83 (1963); Piper v. Jenkins, 207 Md. 308, 313 , 113 A.2d 919, 921 (1955); Holt v. Kolker, 189 Md. 636, 639 , 57 A.2d 287, 288 (1948); Virginia Dare Stores, 175 Md. at 292 , 1 A.2d at 899 . Fraud and negligent misrepresentation share common elements.

Both require the making of a false statement. In the case of negligent misrepresentation, as in fraud, see Carozza, supra, the false statement, although negligently made, must be of a material fact. See Brodsky v. Hull, 196 Md. 509, 515 , 77 A.2d 156, 159 (1949). Each contemplates that the false statement be made with the intention that it be acted upon by ²⁶⁰ the other party.

They also require that the plaintiff rely on, and suffer damage proximately caused by, the false statement. There is a critical difference between the two torts, however. “The critical element of the tort of deceit that distinguishes it from others arising from false representation is scienter on the part of the defendant, i.e. intent to deceive the other party.” Martens Chevrolet, 292 Md. at 333 , 439 A.2d at 537 . Thus, fraud is an intentional tort requiring the defendant to know that his or her representation is false. Levin v. Singer, 227 Md. 47, 63-64 , 175 A.2d 423, 432 (1961); Russo v. Hochschild Kohn & Co., 184 Md. 462, 466 , 41 A.2d 600, 601 (1945).

This means the representation was made either knowingly or in conscious disregard of its truth. See Cahill v. Applegarth, 98 Md. 493 , 502 56 A. 794, 796-797 (1904). Negligent misrepresentation, on the other hand, only requires conduct which falls below the standard of care the maker of the statement owes to the person to whom it is made. Vance, 286 Md. at 496 , 408 A.2d at 731 ; Piper, 207 Md. at 313 , 113 A.2d at 921 .

In Village of Cross Keys v. U.S. Gypsum, 315 Md. 741, 751-52 , 556 A.2d 1126, 1131 (1989), quoting W. Va. Central R.R. Co. v. Fuller, 96 Md. 652, 666 , 54 A. 669, 671-672 (1903), we observed: “[T]here can be no negligence where there is no duty that is due; for negligence is the breach of some duty that one person owes to another. It is consequently relative and can have no existence apart from some duty expressly or impliedly imposed. In every instance before negligence can be predicated of a given act, back of the act must be sought and found a duty to the individual complaining, the observance of which duty would have averted or avoided the injury....

As the duty owed varies with circumstances and with the relation to each other of the individuals concerned, so the alleged negligence varies, and the act complained of never amounts to negligence in law or in fact; if there has been no breach of duty.” ²⁶¹ “The duty element in a negligence action is ‘an obligation to which the law will give effect and recognition to conform to a particular standard of conduct toward another.’ ”. Jacques v. First Nat'l Bank, 307 Md. 527, 532-33 , 515 A.2d 756, 758 (1986), quoting James A. Dooley, Modern Tort Law § 3.03, at 18-19 (1982 & 1985 Cum.Supp.). “Absent a duty of care there can be no liability in negligence.” Id. Consequently, unless the maker of the false statement owes a duty of care to the party who relies on it, there can be no recovery for negligent misrepresentation. Conversely, negligent misrepresentation will not lie, even if a duty exists, if the party to whom the false statement was made did not rely on it.

B. Sussex argues that the petitioners failed to present detailed, precise evidence to show that it knowingly and intentionally defrauded them. It notes that the contract was eventually completely performed; that the completed house was more valuable than the one for which the petitioners originally contracted; and that, on a number of occasions, it offered to release the petitioners from their contract. Sussex also contends that it received verbal approvals from the St. Mary’s County Health Department and, therefore, that it actually believed the house could have been completed within 120 days, even though the contract itself did not require that it be. In any event, citing, e.g., Delmarva Drilling Company v. Tuckahoe Shopping Ctr., Inc., 268 Md. 417, 427 , 302 A.2d 37, 41-42 (1973); Appel v. Hupfield, 198 Md. 374, 379 , 84 A.2d 94, 96 (1951), it states that a promise to complete a house within 120 days, because it is a promise of a future event, cannot support an action for fraud. 5 ²⁶² In this Court, as it did in the circuit court, in support of its motion for summary judgment, Nyman argues that it made no representations at all apart from what it was told by Sussex.

As Sussex’s agent, it said, it simply was a conduit through which information obtained from Sussex was relayed to the petitioners. It maintains, therefore, that it could not have had the requisite intent to defraud the petitioners. In addition to their pleadings, the petitioners relied upon the affidavit of Lea Hutchinson, a real estate agent employed by L.K. Farrell Ltd., the former listing broker for Carroll Manor Subdivision, and Maryland Code (1957, 1988 Repl-Vol.) Art. 66B § 5.05. 6 Ms. Hutchinson’s affidavit stated that she ²⁶³ learned in June of 1986, that the Carroll Manor Subdivision vstas not recorded with the County Planning and Zoning Agency, whereupon she informed the respondent, James Thomas, who stated, “Well, I guess you found out what you should have known.” The affidavit also stated that, when she learned that Nyman was handling the listing for the subdivision, she advised both Brubaker and the manager of Nyman’s office that the subdivision was not recorded. 7 Article 66B, Section 5.05 imposes civil penalties on owners or agents of land located within an unrecorded subdivision when they, using a plat of subdivision prior to recordation or approval, sell or negotiate for the sale of such land. The petitioners argue that a sufficient showing was made successfully to withstand the respondents’ motion for summary judgment.

The petitioners’ complaint alleged and they averred in answers to interrogatories that the respondents separately told them — Nyman early in the negotiations for the house, and Sussex after the contract was executed — that building permits had been obtained for the house and, therefore, that construction could proceed immediately. In their complaint and answers to interrogatories, they also asserted that, in actuality no building permits were issued until some six months after the sales contract was signed. Moreover, the petitioners produced an affidavit to prove that both Nyman ²⁶⁴ and Sussex knew when they made the representations, that building permits had not been issued for the construction of this house and also that their conduct in negotiating the sale was in violation of a State statute. In answers to interrogatories, the petitioners asserted that, notwithstanding their knowledge that building permits had not been issued and even after the first promised delivery date had passed, Sussex continued to represent, as it did in July with respect to the propriety of the petitioners enrolling their children in St. Mary’s County schools to coincide with the completion of the petitioners new home, that it had a present ability to construct the petitioners’ house.

These representations were, they alleged, also false. Taken in the light most favorable to the petitioners, we hold that, either there is a dispute of material fact as to whether the respondents made the critical representation, or there is a material dispute of fact as to the intent with which the representation was made. In either case, the trial court erred in granting summary judgment on this basis. 8 C. With respect to its alternative basis, the intermediate appellate court concluded: In the instant case, appellants concede that they visited the construction site many times during the construction period and often spoke with representatives of Sussex and Nyman. As an experienced real estate agent of 12 years, Thomas Gross had the ability and knowledge to ascertain the status ²⁶⁵ of the subdivision and the building permits.

Indeed, he discovered the lack of permits by his own investigation and visit to the land records office. Therefore, we hold that appellants could not reasonably rely on statements made by representatives of Nyman and Sussex. Appellants had the opportunity to verify the statements and Thomas Gross’s 12 years of experience as a real estate agent gave him special knowledge and competence. Slip op. at 15.

The court relied on Coffin v. Dodge, 146 Me. 3 , 76 A.2d 541, 543 (1950), in which the Supreme Judicial Court of Maine observed: The person who claims to have been defrauded must also have no reasonable opportunity to verify the truth or falsity of the representation. Where the party has an opportunity to learn the facts he has no right to rely on representations, the truth of which he has equal means of ascertaining or by the exercise of reasonable diligence could have ascertained. Maryland Law is otherwise. Savings Bank Retirement System v. Clarke, 258 Md. 501, 507-08 , 265 A.2d 921, 925 (1970); Chesapeake Homes, Inc. v. McGrath, 249 Md. 480 , 484-486 240 A.2d 245, 247-48 (1968); Schmidt, 212 Md. at 593 , 130 A.2d at 576 ; Standard Motor Company v. Peltzer, 147 Md. 509, 513-14 , 128 A. 451, 453 (1925); Bishop, 182 F.2d at 505 (applying Maryland Law).

In Peltzer , an illiterate farmer brought a deceit action against the sellers of the truck he purchased. He alleged that the purchase was made in reliance on false representations they made as to model, condition, and quality. As the facts revealed that the buyer’s opportunity to inspect the truck before purchase was unfettered, one of the seller’s defenses was that his reliance was not justified. Our predecessors rejected that defense: The evidence showed that the buyer here had had some experience as an owner and user of a truck, and that the truck was displayed for his inspection without restriction.

On some of his visits to the salesrooms, he remained an hour and more. He testified, however, that his illiteracy rendered him unable to read marks or names on the truck ²⁶⁶ and its engine, and that, having the statements of the selling agent to depend upon, he did not undertake to determine any of the facts for himself. He was not an expert at motor vehicles; he was a farmer. The selling agents, on the other hand, were presumably experts with exact information as to the truck they were selling.

And the court could not say it was negligence and folly for this buyer to accept and rely on whatever had been told him. Cf. Cook v. Gill, 83 Md. 177 [, 188, 34 A. 248, 249 (1896) ]. We know, of course, that it is natural and usual for ordinary buyers to do so in respect to such things as the model, the make of engine, the history of the truck, and its present condition.

And we think the jury were entitled to find, from the nature of the representation and their tendency to influence such a buyer, that the selling agents intended them to be relied on, despite the opportunities afforded the buyer for informing himself. 147 Md. at 513-14 , 128 A. 451 . A similar defense was offered and rejected in Schmidt . There, the plaintiffs purchased all of the stock of a corporation, the principal asset of which was an apartment building. Prior to the sale, the defendants had represented, in a brochure advertising the apartment building for sale, that it had a new roof and, orally, specifically mentioning the roof, that no money need be spent on the building.

Before consummation of the sale, one of the purchasers had examined the roof, although, the testimony indicated, not minutely, and the plaintiffs’ accountant, pursuant to agreement, had reviewed and approved the corporation’s balance sheet. When the plaintiffs discovered that the roof was not new, they brought an action against the defendants for, inter alia, deceit. The defendants argued that because it was obvious from the balance sheet that no new roof had been installed recently, the plaintiffs could not have relied on their representations as to the roof. Rejecting that argument, the Court noted that “the principal is affected by the agent’s knowledge, only if