Smith v. Bolles

From wikilawschool.net. Wiki Law School does not provide legal advice. For educational purposes only.
Revision as of 02:44, July 14, 2023 by Lost Student (talk | contribs) (Text replacement - "|case_treatment=No " to "")
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)

Smith v. Bolles
Court Supreme Court of the United States
Citation
Date decided December 11, 1889

Facts

Mr. Bolles bought 4,000 shares of stock in a mining company at $1.50/share for a total purchase price of $6,000. Bolles relied on the representation of Mr. Smith in deciding to buy the stock.

Later on, Bolles learned that Smith had mis-represented the stock value.

Procedural History

Bolles filed a suit against Smith for fraudulent misrepresentation & sought damages.

Bolles claimed that Smith's representation made the stock appear $10/share.

The judge instructed that

(Bolles's damages) = (reasonable market value of the stock if it was as Smith represented) - (amount Bolles paid)


The jury decided in favor of Bolles.

Smith appealed to SCOTUS under a writ of error.

Issues

Is the proper measure of damages in a fraudulent inducement action

= (the reasonable value of the property if it'd been as represented) - (contract price)  ?

Holding

No. The proper measure of damages in a fraudulent inducement case isn't the difference between the contract price & the reasonable value of the property if it'd been as represented.

SCOTUS: The jury had awarded improper compensation to Bolles.

Judgment

SCOTUS reversed & remanded the case for re-trial.

Reasons

Melville Fuller: A claim for fraudulent inducement sounds in tort, not contract. In tort law, plaintiffs can recover for damages that naturally & proximately flow from the defendant's misconduct.

Rule

Fuller: The question is

  • What did the plaintiff (Bolles) lose?
  • not "What would plaintiff have gained?"

Resources