Kilgore v. Bruce

• Decision Date: 21 May 1896
• Citation: 166 Mass. 136,44 N.E. 108
• Parties: KILGORE et al. v. BRUCE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

166 Mass. 136

44 N.E. 108

KILGORE et al. v. BRUCE.

Supreme Judicial Court of Massachusetts, Suffolk.

May 21, 1896

COUNSEL

Louis D. Brandeis and Ezra R. Thayer, for plaintiffs.

Elder Wait & Whitman, for defendant.

OPINION

ALLEN J.

The plaintiffs contend in the first place that the alleged misrepresentations were not available in defense, because they were merely promissory in their character, and because they amounted to no more than dealer's talk, which the law cannot take notice of. According to the report, the plaintiff Kilgore had all of the shares of the company in his hands for sale, and was negotiating at the same time with the defendant, with West, and with Whitney, to sell a part of them to each. He told the defendant that all the stock should be sold, or none, and falsely and fraudulently represented that all the stock he was selling to either of the three purchasers was being sold for the same price, to wit, $1,400 per share, and that this was the price which Whitney, in especial, was paying. These representations were made in answer to specific questions put by the defendant who told Kilgore that he would not make the purchase unless these were the facts. Being induced thereby, the defendant accordingly took 50 shares at $1,400 a share; but Kilgore had in fact already secretly agreed to sell 61 shares to Whitney at $1,221.42 per share, which agreement was carried out. The separate sales to the defendant, to Whitney, and to West were all consummated at about the same time. It is not stated in what order they were made. Nor is this material. In effect they were contemporaneous. All these sales were to be made, or none. There is no room, therefore, for the suggestion that the representations of Kilgore to the defendant were merely promissory in their character; and we have no occasion to consider the question whether the defendant would be able to avail himself of them in defense, under his answer, if they were merely promissory. They were misrepresentations as to what the plaintiff Kilgore was doing at the very time when he was negotiating with the defendant. Nor do they fall within the class of such lying talk as dealers may indulge in with legal impunity. We have recently intimated our disinclination to extend this impunity further than is established by existing decisions. Way v. Ryther, 165 Mass. 226, 42 N.E. 1128. Misrepresentations as to the price paid by a third person, or as to the selling price, have heretofore been held actionable or indictable. Manning v. Albee, 11 Allen, 520; Belcher v. Costello, 122 Mass. 189; Com. v. Wood, 142 Mass. 459, 8 N.E. 432; Fairchild v. McMahon, 139 N.Y. 290, 34 N.E. 779. Falsehood as to rents received is similar in principle. Brown v. Castles, 11 Cush. 348, 350. False statements as to market value may not be actionable, if made to an experienced dealer in the article spoken of. Lilienthal v. Brewing Co., 154 Mass. 185, 28 N.E. 151; Graffenstein v. Epstein, 23 Kan. 443. But it is otherwise if they are made to an unskilled person. Dawe v. Morris, 149 Mass. 188, 192, 21 N.E. 313. The statements of Kilgore were equivalent to representations that Whitney was paying $1,400 a share for his part of the stock. This was a material fact in the mind of the defendant, and Kilgore knew that it was. The defendant may avail himself of such a false and fraudulent statement in defense. See Smith, Kline & French Co. v. Smith, 166 Pa.St. 563, 31 A. 343. Nor is the defendant cut off from this defense by the fact that the shares were worth what he agreed to pay for them. Ordinarily, in case of a sale procured by the vendor's deceit, the measure of damages is the difference between the actual value of the property at the time of the purchase, and its value if the property had been what it was represented or warranted to be. Morse v. Hutchins, 102 Mass. 439. That rule is not applicable in the present case. There were no misrepresentations here as to the character or probable productive power of the things sold, but the purchaser was led by fraud to give more than the vendor would have been willing to accept rather than lose the sale. In such a sale the purchaser is injured, not by being led into a bargain which is bad in itself, but by being led into a bargain which is less favorable than he might and otherwise would have obtained. If A. has a piece of property which he is willing to sell for $5,000 if he can get no more, and if B. is willing to pay $10,000 for it if he can get it for no less, and it is put up at auction, and B. bids $5,000, and there is no genuine bid above that sum, but by A.'s by-bidding the price is run up so that the property is finally struck off to B. at $10,000, and he pays that sum and takes the property, it is plain that he has lost $5,000 by the fraud of A., and this is the sum which he can recover in an action against A. for the fraud. See Veazie v. Williams, 8 How. 148. The same principle is applicable here. In order to do justice between the parties, the defendant should be allowed to deduct from his note whatever additional sum he was led to agree to pay, by means of the fraud of Kilgore, above that for which he could and would otherwise have got the property. The rule of damages is to be such as will be just under the circumstances of the particular case. Nash v. Trust Co., 163 Mass. 574, 40 N.E. 1039; Crater v. Binninger, 33...