## Facts

- Morse bought Hutchins’s interest in a business after Hutchins made statements about the interest’s condition and value.
- Morse alleged the statements were false, fraudulent, and induced him to pay more than the interest was worth.
- Morse sued on two theories: breach of contract and tortious deceit (fraudulent misrepresentation).
- The jury found for Hutchins on the contract count but for Morse on the deceit count and awarded damages.
- The trial judge instructed that deceit damages were the difference between the interest’s actual value at purchase and the value it would have had if Hutchins’s representations were true.
- Hutchins challenged only the damages instruction by exceptions.

## Issues

1. In an action for deceit arising from a fraudulent sale, is the measure of damages limited to out-of-pocket loss (price paid minus actual value), or may it be the benefit-of-the-bargain (represented value minus actual value)?
2. Did the trial court err by instructing the jury to measure deceit damages as the difference between actual value and value as represented?

## Decision

- The court overruled Hutchins’s exceptions and let the verdict and judgment for Morse on the deceit count stand.
- The court approved the instruction measuring damages as the difference between the property’s actual value at the time of purchase and its value if the representations had been true.
- The judgment for Hutchins on the contract count remained unaffected.

## Legal Principles

- A seller who fraudulently misrepresents the quality or value of what is sold is liable in tort for deceit.
- In deceit for fraudulent inducement in a sale, the plaintiff may recover benefit-of-the-bargain damages: actual value at the time of the transaction compared with the value as represented.
- A plaintiff may recover in tort for deceit even if a related contract claim fails.

## Conclusion

The court held that, for fraudulent misrepresentation in the sale of a business interest, the proper measure of damages in deceit is the benefit-of-the-bargain—the difference between the actual value at purchase and the value the interest would have had if the defendant’s representations were true.


Morse v. Hutchins, 102 Mass. 439 (Mass. 1869)