## Facts

- Sellers listed a house and adjacent lots through a brokerage; the listing stated the property size as 6.8 acres.
- A broker’s salesperson advertised the property as containing about six acres and later stated he would guarantee at least 6.6 acres.
- The purchasers attended an open house and later walked the property boundaries with the salesperson before making an offer.
- The purchasers bought the property for about $54,000 without obtaining a survey, despite questioning the acreage.
- After closing, the property was found to contain 4.6 acres, substantially less than represented.
- The purchasers sued the sellers and the brokerage for fraudulent misrepresentation, seeking actual and punitive damages.
- A jury awarded $6,000 in actual damages; the trial court declined to submit punitive damages to the jury.

## Issues

1. Whether substantial evidence supported that the purchasers reasonably relied on the salesperson’s acreage representations, despite having walked the boundaries.
2. Whether the purchasers proved legally cognizable actual damages and the proper measure of damages for fraudulent misrepresentation of acreage.
3. Whether proof of fraudulent misrepresentation alone required submission of punitive damages to the jury.

## Decision

- The court affirmed the judgment for $6,000 in actual damages against the brokerage.
- The court held substantial evidence supported reliance on affirmative representations about acreage; knowing boundaries did not equate to knowing acreage.
- The court held the benefit-of-the-bargain measure supported the compensatory award.
- The court affirmed the refusal to submit punitive damages, holding fraud alone does not require a punitive-damages instruction absent aggravating circumstances.

## Legal Principles

- A buyer may reasonably rely on a seller’s or broker’s specific representations about acreage even after inspecting and walking the property, because acreage is not ordinarily ascertainable by sight.
- In intentional misrepresentation, compensatory damages may be measured by the benefit-of-the-bargain rule: the difference between the property’s value as represented and its actual value.
- Punitive damages in fraud cases require evidence of aggravated misconduct (such as malice or willful and wanton disregard), not merely the elements of “simple” fraud.

## Conclusion

The Iowa Supreme Court upheld compensatory fraud damages based on misrepresented acreage under the benefit-of-the-bargain measure and clarified that punitive damages are not available absent additional evidence of aggravated or malicious conduct beyond simple fraudulent misrepresentation.


Holcomb v. Hoffschneider, 297 N.W.2d 210 (Iowa 1980)