Smith v. Bolles

132 U.S. 125 (1889)

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Nature of the Case

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Facts

Smith (D) and others organized a corporation for mining with a capital of $2 million divided into 100,000 shares of $20 each. Bolles (P) was wholly ignorant of the company and mining in general. D solicited P to purchase some of the stock. During this solicitation, D made a large number of misrepresentations. Based on these misrepresentations, P purchased 2,000 shares at $1.50 each. Eventually, P realized the stock was worthless after being told it was worth at least $10 per share. Other parties purchase shares based on the same misrepresentations with aggregate total losses from the purchases that were far less than what they sought in damages. They assigned all their claims to one party and that party sued in the aggregate for $65,000 in damages. D admitted incorporation but denied all the allegations and set up the defense of the statute of limitations. In the original petition P merely wanted rescission of the contract and to get his money back but the amended petition asked for damages from the alleged false and fraudulent representations. P got the verdict with damages at $8,140. This appeal resulted.