## Facts

- The Sorensons purchased a dwelling in Oswego, Oregon, from Arthur and Mrs. Tillen.
- Charles D. Gardner had built the house and, with his wife, lived on adjoining property at the time of the Sorensons’ purchase.
- The Sorensons alleged the Gardners made false representations to induce the purchase, including that:
  - the house was well constructed in a workmanlike manner and met all minimum code requirements, particularly for wiring, plumbing, septic tank, and sewage disposal; and
  - the well, with the existing pump, would deliver 950 gallons of pure water per hour and would meet health standards and building code requirements.
- The Sorensons presented evidence that the statements were made and that they were false.
- A jury found for the Sorensons on deceit and awarded $2,000 in damages.

## Issues

1. Whether statements that a house met “minimum code requirements” and that a well would deliver 950 gallons per hour and meet health/building standards were actionable misrepresentations (as opposed to nonactionable opinion or misrepresentations of law).
2. Whether defendants could avoid liability by arguing on appeal that they were non-vendor third parties to the sale.
3. Whether the trial court misstated the measure of damages for deceit in a real-property transaction.

## Decision

- The court held the evidence was sufficient to submit the deceit claim to the jury; the directed-verdict motion was properly denied as to actionable misrepresentation.
- The court declined to consider the “third-party” defense because it was not properly raised in the trial court.
- The court reversed and remanded for a new trial because the jury was improperly instructed on the measure of damages.

## Legal Principles

- A representation framed as a legal conclusion (e.g., “meets all code requirements”) can be actionable in deceit if a reasonable hearer would understand it as asserting specific underlying facts, and those factual implications are false and material.
- Specific performance representations about property characteristics (e.g., a well’s output capacity) are factual assertions and may support a deceit claim.
- An argument not properly preserved in the trial court generally cannot be raised for the first time on appeal.
- In Oregon deceit actions involving the purchase of real property, the proper measure of damages is the difference between the fair market value the property would have had if it were as represented and the price actually paid.

## Conclusion

The Oregon Supreme Court permitted the fraud theory to proceed based on code-compliance and well-capacity representations but reversed the plaintiffs’ judgment because the jury was not instructed to calculate damages using fair market value as represented minus the purchase price, requiring a new trial.


Sorenson v. Gardner, 334 P.2d 471 (Or. 1959)