DIGGES, J., delivered the opinion of the Court.
In this action we consider whether there still exists in Maryland a tort suit for negligent misrepresentation independent of one for deceit. The case arose when appellant Martens Chevrolet, Inc.
For reasons which we will explore presently, we conclude that the tort of negligent misrepresentation is viable in Maryland. Consequently, as the issue presented here arose in the context of a motion for directed verdict, the evidentiary background will be stated in a light most favorable to the plaintiff-appellant. Impala Platinum v. Impala Sales, 283 Md. 296, 328, 389 A.2d 887, 905-06 (1978). In February, 1976, Imperial Investment Company through its officers, Harry J. Marten, Jr. and his son, Harry J. Marten, III, initiated negotiations for the purchase of a Chevrolet automobile dealership owned in corporate form by Franklin Loving and Howard F. Seney. Throughout the bargaining period, the Martens informed the sellers that they intended to continue the operation of the Chevrolet franchise after the sale, and therefore desired accurate information concerning the past profitability of the enterprise. When asked during the first meeting of the parties about the financial status of the dealership, Mr. Seney responded by handing the buyers a handwritten financial "trend" sheet and stating, "this pretty well depicts the trends of how we have been doing." This sheet received by the Martens contained a list of the "net profit" figures for each year the dealership had been in operation, including a figure showing $2,211 profit for the previous year, 1975. Unknown to the buyers, this sum failed to incorporate adjustments for such items as bonuses and taxes which are routinely reflected in audited financial statements. After examining the trend sheet, the accountant
After the franchise operated as Martens Chevrolet, Inc. for six months, the accountant for the new company presented its owners with a statement revealing a $187,000 loss. The Martens were baffled as to the reason for the dealership's financial plunge until its comptroller, who had formerly worked in that capacity for the seller, divulged a 1975 year-end financial statement which he had prepared for Loving Chevrolet listing a deficit for that year of $39,153.00, instead of a $2,211 profit as reflected in the 1975 trend sheet. In addition, the comptroller gave the new owners a financial statement completed by a certified accountant, following an audit, which stated that the losses sustained by the former dealership in that year were not $39,153, but, rather, $69,000. Both of these documents had been prepared well before the date of sale, but the sellers had neglected to inform the buyers of their existence. On the basis of this newly received information, the Martens brought the present action against Loving, Seney and their company.
With the relevant factual predicate in hand, we turn now to address the question of whether there is presently cognizable in Maryland a tort action for negligent misrepresentation. We begin our inquiry by noting that initially under the common law there existed no separate tort of negligent misrepresentation. Thus, if a party was injured by the false representations of another, his only recourse in tort, if there was one, compelled the bringing of an action for deceit and proving all the elements of that tort. Buschman v. Codd, 52 Md. 202 (1879); Lamm v. Port Deposit Homest'd Asso., 49 Md. 233 (1878); McAleer v. Horsey, 35 Md. 439 (1872). The requirements for a successful deceit suit, as they have evolved in Maryland, were stated by this court in Gittings v. Von Dorn, 136 Md. 10, 15-16, 109 A. 553, 554 (1920), over fifty years ago, and they remain the same to this day:
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 — intent to deceive the other party. In formulating the contours of this state of mind requirement, our predecessors in Cahill v. Applegarth, 98 Md. 493, 56 A. 794 (1904), essentially embraced the view established
The teachings of Cahill were reemphasized one year later in Donnelly v. Baltimore Trust & Guarantee Co., 102 Md. 1, 13, 61 A. 301, 306 (1905), where this Court asserted that "[t]he foundation of the [deceit] action is actual fraud, and nothing short of this will suffice. Consequently, a misrepresentation believed by the speaker to be true, though induced by his ignorance or negligence, will not sustain an action for deceit." Our later cases have adhered to this principle. See Appel v. Hupfield, 198 Md. 374, 379, 84 A.2d 94, 96 (1951); Holt v. Kolker, 189 Md. 636, 639, 57 A.2d 287, 288 (1948).
Realizing the inequities stemming from the strictures imposed for recovery in a deceit action, and being cognizant of the development of this area of the law in our sister jurisdictions, this Court in 1938 recognized for the first time the existence in this State of an action for negligent misrepresentation. Virginia Dare Stores v. Schuman, 175 Md. 287,
The only one of our many decisions in this area which in any way impinges upon this just announced reaffirmation is Delmarva Drill Co. v. Tuckahoe, 268 Md. 417, 302 A.2d 37 (1973), where certain statements and the result there reached seemingly portended the elimination of negligent misrepresentation as a viable tort cause of action in this State. See Geo. Byers Sons, Inc. v. East Europe Import Export, 488 F.Supp. 574, 586 (1980); Leonard v. Sav-A-Stop Services, 289 Md. 204, 213 n. 7, 424 A.2d 336, 240 (1981); Note, Deceit and Negligent Misrepresentation in Maryland, 35 Md. L. Rev. 651, 671-73 (1976). Although, when compared with our prior cases in this area, Tuckahoe apparently supports the view that the tort has been eliminated, we nevertheless intended no such departure in that case and have subsequently recognized the existence of the cause of action. See Vance v. Vance, 286 Md. 490, 408 A.2d 728 (1979). Thus, to the extent that Tuckahoe, when viewed in light of its factual background, casts any doubts on the existence of negligent misrepresentation as an avenue for tort recovery in Maryland, we hereby overrule it.
We summarize and clarify. The principal elements of the tort of negligent misrepresentation, as formulated in
In this regard, see Virginia Dare Stores v. Schuman, supra; Holt v. Kolker, supra; Piper v. Jenkins, supra; Brack v. Evans, supra; St. Paul at Chase v. Mfrs. Life Insur., 262 Md. 192, 278 A.2d 12 (1971); Vance v. Vance, supra; Note, 35 Md. L. Rev. supra at 662; see generally Geo. Byers Sons, Inc. v. East Europe Import Export, supra at 586; James, Gray, Misrepresentation, 37 Md. L. Rev. 286 (part I), 488 (part II) (1978).
In the present case, the appellants, by their amended declaration, alleged in separate counts both negligent misrepresentation and deceit. Nothing prohibits a plaintiff from pleading both deceit and negligent misrepresentation in one declaration and then relying on the same nucleus of facts in an attempt to satisfy the differing burdens of proof on these alternative claims. See Md. Rule 313; Peurifoy v. Congressional Motors, 254 Md. 501, 515, 255 A.2d 332, 340 (1969). The trial judge, however, by directing a verdict in this case, eliminated the possibility of recovery under the negligent misrepresentation count, seemingly on the ground that the cause of action does not exist in this State. If this be true, as indicated above, it is incorrect. On the other hand, if the directed verdict on the negligent misrepresentation count resulted from the trial judge's determination that there was insufficient believable evidence to support the
We turn now to address the two evidentiary questions presented by this appeal, either of which, contends appellant, requires a new trial of the deceit claim. The first concerns the cross-examination during trial of one of the appellant's witnesses (not a party), Harry J. Martens, Jr., by the attorney for appellee Loving. The colloquy which gave rise to this issue occurred as follows:
A bench conference ensued during which the trial judge overruled the appellant's objection and allowed the question. The colloquy then continued.
Defense counsel's obvious purpose was to impeach the credibility of Martens' testimony concerning the alleged deceit of the appellees in the sale of the automobile dealership by revealing to the jury the fact that Martens, himself, had been formally charged with fraud in an unrelated civil court case by another party.
It is hornbook law that when a person testifies as a witness, generally he may be cross-examined on such matters and facts as are "likely to affect his credibility, test his memory or knowledge, show his relation to the parties or the cause, his bias, or the like," Kantor v. Ash, 215 Md. 285, 290, 137 A.2d 661, 664 (1958), and the allowance of such questioning is normally reserved for the sound discretion of the trial judge. Shupe v. State, 338 Md. 307, 310, 208 A.2d 590, 592 (1965); Wells v. State, 236 Md. 381, 388, 203 A.2d 912, 917 (1964); Lloyd v. State, 219 Md. 343, 349, 149 A.2d 369, 373 (1959), cert. denied, 359 U.S. 1014 (1959). It is equally clear, however, that when the receipt of evidence is "manifestly wrong and substantially injurious" in the circumstances of a particular case, we have no alternative but to reverse. Beahn v. Shortall, 279 Md. 321, 331, 368 A.2d 1005, 1011 (1977); Shupe v. State, supra, 238 Md. at 310, 208 A.2d at 592; Plank v. Summers, 205 Md. 598, 606, 109 A.2d 914, 917 (1954). Although this court, as well as the General Assembly, has allowed evidence of certain criminal convictions
The final matter presented in this case concerns the trial
Since no modification of the discovery terminating order was sought by the appellees here, it is manifest that the deposition in question was taken in violation of the Maryland Rules. However, as we have already concluded on other grounds that a new trial is required on the deceit and negligent misrepresentation claims, we pursue the matter no further. Parenthetically, we note that should the new proceedings which we award take place, and the appellee desire again to introduce this witness' testimony in deposition form, it would be prudent to redepose him — this time in accord with the appropriate Maryland Rules.
Judgment of the Circuit Court for Montgomery County reversed and case remanded to that Court for a new trial.
Costs to be paid by the appellees.
This evidentiary principle has been applied in civil cases. Nelson v. Seiler, 154 Md. 63, 139 A. 564 (1927); Kremen v. Rubin, 139 Md. 682, 116 A. 640 (1922); Bonaparte v. Thayer, 95 Md. 548, 52 A. 496 (1902).