The rescission of a contract may be based upon actual fraud where a false representation of a material fact is made with the knowledge of its falsity and with the intent to deceive. Groothand v. Schlueter , 949 S.W.2d 923, 927 (Mo. App. 1997) ( citingOsterberger v. HitesConst. Co. , 599 S.W.2d 221, 227 (Mo. App. 1980)). However, it may also be based upon a false representation or a concealment, which is a misrepresentation or concealment made innocently as a result of a misapprehension or mistake.
For a case of fraud based on suppression of a fact, a plaintiff must establish that the defendant had a duty to disclose a material fact. Smith v. General Motors Corp., 979 S.W.2d 127, 129 (Ky. Ct. App. 1998); Osterberger v. Hites Construction Co., 599 S.W.2d 221, 227 (Mo. App. 1980). "It is, of course, well established that mere silence is not fraudulent absent a duty to disclose."
Public disclosure of such information may put a reasonable purchaser on notice to inquire about the problems, however, absent evidence that such information was available to plaintiffs, it cannot be said that the means of acquiring the undisclosed information was balanced or fair. Moreover, in Osterberger v. Hites Constr. Co., 599 S.W.2d 221, 228-229 (Mo.App. 1980), the court recognized that "fraud may be predicated on a concealed fact even though that fact could have been ascertained by an examination of the public records." A public record of an undisclosed fact does not necessarily negate a party's duty to disclose.
A party who is fraudulently induced to enter a contract may either (1) affirm the contract and sue at law for damages, or (2) disaffirm the contract and sue in equity for rescission. Osterberger v. Hites Const. Co. , 599 S.W.2d 221, 227 (Mo.App. E.D. 1980); Cottonhill Inv. Co. v. Boatmen's Nat. Bank of CapeGirardeau, 887 S.W.2d 742, 744 (Mo.App. S.D. 1994). There is an important distinction between these two courses of action which the Schlueters briefly address. The distinction is important because the elements a party must prove to make a prima facie case differ depending upon which course of action the party takes.
A reasonable company in Lafarge's position with a correct understanding of the law would have attached importance to the Strother District. That Lafarge was mistaken in its understanding of the law goes to the subjective importance it would have placed on the Strother District, not the importance a reasonable company would have placed on the same information. See Osterberger v. Hites Constr. Co., 599 S.W.2d 221, 228 (Mo.Ct.App. 1980) ("The test of materiality . . . is not, subjectively, whether the fact concealed would have affected the conduct of the particular buyer concerned but, rather, whether, objectively, the fact concealed would have affected the conduct of a reasonably prudent buyer."). While the importance Lafarge would have placed on the Strother District because of its beliefs concerning its tax obligations is relevant for purposes of causation — i.e., whether Lafarge in fact would have proceeded differently had it known of the Strother District — it is irrelevant with respect to materiality.
The Wilkerson agency, acting as Cedar Hill's agent, sent notices to add the Roses to the policies as mortgagees in several years, but in each instance, it failed to add Rockwood Bank as a mortgagee. The jury was free to view the disclosure of partial information as tantamount to an intentional concealment of the information not disclosed. Osterberger v. Hites Constr. Co., 599 S.W.2d 221, 227 (Mo.Ct.App. 1980) ("[W]e have found that partial information may be as misleading and deceptive as active misrepresentation, and we have imposed a duty to disclose material facts where the defendant has invited plaintiff's confidence by making only a partial disclosure."). In addition, Cedar Hill and the Wilkerson agency failed to list the Rockwood Bank mortgage in response to ARA's request for updated information in 2002, and they failed to disclose the Rockwood Bank mortgage when disclosing the Roses' mortgage in November 2002.
"To hold an officer of a corporation liable, he must be shown to have had actual or constructive knowledge of the actionable wrong and participated therein." Osterberger v. Hites Const. Co., 599 S.W.2d 221, 229 (Mo.Ct.App. 1980). See also Constance v. B.B.C. Development Co., 25 S.W.3d 571 (Mo.Ct.App. 2000).
However, “[f]raud can be shown by circumstantial evidence[.]” Osterberger v. Hites Construction Company, 599 S.W.2d 221, 229 (Mo.App. E.D.1980). As “fraud is seldom capable of direct proof,” it may be established by a variety of circumstances combined together.
However, “[f]raud can be shown by circumstantial evidence[.]” Osterberger v. Hites Construction Company, 599 S.W.2d 221, 229 (Mo.App. E.D.1980). As “fraud is seldom capable of direct proof,” it may be established by a variety of circumstances combined together.
This follows because rescission can be based upon a false representation, "which, although described or labeled as fraudulent, is in reality a misrepresentation or concealment made innocently as a result of a misapprehension or mistake." Osterberger v. Hites Const. Co., 599 S.W.2d 221, 227[6] (Mo.App. 1980). Historically, fraudulent misrepresentation in a rescission case has been labeled "constructive fraud" in those instances where the fourth-element allegation is that the speaker was ignorant of the falsity of his or her representation.