Bellefeuille v. Medeiros

Decision Date10 January 1957
Citation335 Mass. 262,139 N.E.2d 413
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Louis A. Perras, Jr., New Bedford, for plaintiff.

Solomon Rosenberg, New Badford, for defendant.


SPALDING, Justice.

This is a bill in equity in which the plaintiff seeks to rescind the sale of a business because of fraud. The judge made findings of material facts of which the following is a summary: In August, 1954, the defendant was the owner of a business in Fairhaven which he conducted under the name of 'F. & B. Cutrate & Fleet Bag Co.' The business consisted of a small dry goods store and an adjoining shop in which the defendant manufactured scallop bags. 1 The defendant desired to sell the business and employed one Mello to sell it for him. Mello brought the plaintiff to see the defendant, and negotiations began for the sale of the business. During these negotiations the defendant told the plaintiff that he (the defendant) could obtain cloth for the manufacture of scallop bags at a certain price per yard, and that if the plaintiff bought the business he would obtain the cloth for the plaintiff. The plaintiff had no previous experience either in operating a dry goods store or in manufacturing scallop bags, and relied upon the statements made by the defendant as to the volume of business and profits 'and particularly upon the defendant's statement that he could obtain cloth for the manufacture of the scallop bags.' On August 16, 1954, an agreement having been reached for the sale of the business including the stock, fixtures and good will, the defendant executed and delivered a bill of sale to the plaintiff in return for $4,500, the agreed purchase price.

The plaintiff took possession of the store and shop and undertook to carry on the business. There was no cloth for the manufacture of scallop bags available at this time and the plaintiff made 'repeated requests of the defendant to obtain cloth for him, relying upon the defendant's representation that cloth was available and that he, the defendant, would obtain it for him.' The defendant at various times 'agreed to take the plaintiff to cloth dealers, but never kept appointments made for that purpose, and finally under a pretext that news of the sale by him to the plaintiff had leaked out, because of which dealers would not sell cloth, told the plaintiff that he could not obtain the cloth.'

The 'representations made by the defendant, relative to the availability of cloth in the market, and particularly at the price named by the defendant to the plaintiff prior to the sale were misrepresentations, either intentionally or negligently made, under circumstances for which the defendant was responsible.' After making the foregoing findings the judge referred the case to a master 'to determine the fair value as of February 7, 1955, 2 of the equipment, goods in process, goods manufactured, good will, the stock in trade, and any and all other chattels and assets obtained by the plaintiff from the defendant as a result of said sale, and the amount and value of all such assets received in any sale or disposition by the plaintiff of the goods received, and the total amount of the damages sustained, if any, by the plaintiff.'

After hearing the parties, pursuant to the foregoing order of reference, the master filed a report. It was agreed that the machinery and equipment involved in the sale had been submerged in flood waters resulting from the hurricane of August 31 1954. The value of this property was determined, by consent of the parties, on the basis of its condition before submersion. The master found the value of this and the other property involved in the sale to be $1,964.43. 3 Deducting this sum from the purchase price of $4,500 he found that the damages sustained by the plaintiff, exclusive of interest and costs, was $2,535.57.

An interlocutory decree was entered confirming the master's report and overruling the defendant's exceptions thereto. A final decree was entered adjudging that the sale be set aside and awarding damages to the plaintiff in the sum of $2,753.35. The defendant appealed. The evidence is not reported.

1. Contrary to the defendant's contention, we are of opinion that on the findings the representations as to the availability and price of the cloth concerned matters susceptible of knowledge and were stated as facts and not as opinion and hence were of the sort that would support a decree for rescission. They were 'misrepresentations, either intentionally or negligently made,' and the plaintiff relied on them. If the statements were knowingly false there was plainly a basis for rescission. Rykiel v. Sklaver, 259 Mass. 608, 611, 156 N.E. 842; Lang v. Giraudo, 311 Mass. 132, 138, 40 N.E.2d 707; Verville v. Mason, 334 Mass. ----, 135 N.E.2d 536. But a false, though innocent, representation which concerns a matter susceptibel of knowledge and is stated as a fact and not as opinion may afford the basis of rescission. Rudnick v. Rudnick, 281 Mass. 205, 208, 183 N.E. 348. Yorke v. Taylor, 332 Mass. 368, 371, 124 N.E.2d 912, and cases cited. The defendant's contention that relief is precluded by the plaintiff's failure to investigate the truth or falsity of the defendant's representations is without merit. Yorke v. Taylor, supra, 332 Mass. at pages 372-374, 124 N.E.2d at pages 915, 916.

2. The damages awarded to the plaintiff were determined on the basis of the difference in value between what the plaintiff paid and what he actually received. Relying on the rule of damages applicable in actions of tort for deceit, the defendant argues that the rule applied by the judge was improper. Were this an action for deceit the defendant's contention would be correct, for in such cases the rule is 'the difference in actual value between that which the plaintiff in fact got and that which he would have got if the representation had been true.' Piper v. Childs, 290 Mass. 560, 562, 195 N.E. 763, 764. Cedar v. McCarthy, 320 Mass. 618, 619, 70 N.E.2d 698. But this is not an action for deceit. The bill sought rescission and the case was tried and decided on that theory.

We are mindful that the judge found that at no time did the plaintiff restore or offer to restore to the defendant what he had received from him. Ordinarily one seeking rescission of a transaction must restore or offer to restore all that he received under it. Fitch v. Ingalls, 271 Mass. 121, 170 N.E. 833; Jurewicz v. Jurewicz, 317 Mass. 512, 517, 58 N.E.2d 832. Restatement: Restitution, s. 66. This requirement is applied with considerable...

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    ...the party requesting such remedy “must restore or offer to restore all that he received under it.” Bellefeuille v. Medeiros, 335 Mass. 262, 139 N.E.2d 413, 415 (1957) (citations omitted). On the other hand, recoupment “allows a defendant to ‘defend’ against a claim by asserting—up to the am......
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    ...618, 619-620, 70 N.E.2d 698; Spillane v. Corey, 323 Mass. 673, 675-676, 84 N.E.2d 5, 13 A.L.R.2d 1368. See also Bellefeuille v. Medeiros, 335 Mass. 262, 265-266, 139 N.E.2d 413. This rule affords a recovery in deceit closely resembling that for breach of warranty. See Williston, Contracts (......
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