Smith V. Bolles
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''Smith v. Bolles''
132 U.S. 125 (1889)
was an action to recover out-of-pocket damages for alleged fraudulent representations in the sale of shares of mining stock. The plaintiff was denied ''benefit of the bargain'' damages. The case is important in contract law, specifically
legal remedies A legal remedy, also referred to as judicial relief or a judicial remedy, is the means with which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes another court order to impose its ...
and compensating expectancies.


Facts

Plaintiff, Richard J. Bolles, agreed to buy from defendant Lewis W. Smith four thousand shares of the stock, at $1.50 per share. The contract was completed in March, 1880, by the payment of $6,000. Plaintiff then alleged that defendant's representations regarding the stock were false and fraudulent, and that in fact the stock was worthless. Plaintiff claimed furthermore that had the representations been true, the stock would now be worth $10 per share, and so plaintiff claimed that he had sustained damages of $40,000.


Judgment

Chief Justice Fuller disagreed, saying the measure of damages is not the difference between the contract price and the fair market value if the property had been properly represented. The trial court should not have looked to what the plaintiff ''might have gained'' if the representations had been true, but rather what he had lost by being deceived into the purchase. Defendant is "bound to make good the loss sustained, such as the moneys the plaintiff had paid out and interest, and any other outlay legitimately attributable to defendant's fraudulent conduct; but this liability did not include the expected fruits of an unrealized speculation.". The judgment was reversed, with directions to grant a new trial.


See also

*
Expectation damages Expectation damages are damages recoverable from a breach of contract by the non-breaching party. An award of expectation damages protects the injured party's interest in realising the value of the expectancy that was created by the promise of the ...
* List of United States Supreme Court cases, volume 132 *'' Erlanger v New Sombrero Phosphate Co'' (1878) 3 App Cas 1218 *''
Derry v Peek ''Derry v Peek'' 889UKHL 1is a case on English contract law, Misrepresentation">fraudulent misstatement, and the tort of deceit. ''Derry v Peek'' established a 3-part test for fraudulent misrepresentation, whereby the defendant is fraudulent if ...
''


References


External links

* {{caselaw source , case = ''Smith v. Bolles'', {{ussc, 132, 125, 1889, el=no , courtlistener =https://www.courtlistener.com/opinion/92576/smith-v-bolles/ , justia =https://supreme.justia.com/cases/federal/us/132/125/ , loc =http://cdn.loc.gov/service/ll/usrep/usrep132/usrep132125/usrep132125.pdf 1889 in United States case law Judicial remedies United States Supreme Court cases United States Supreme Court cases of the Fuller Court United States securities case law Fraud in the United States