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57 N.J.L. 679

Smith v. Duffy

Supreme Court of New Jersey

Decided March 15, 1895

Supreme Court of New Jersey · decided 1895-03-15

On error. In May, 1891, the plaintiff bought at par, from the defendant, ten shares of the capital stock of the Noble Coal Company, a Pennsylvania corporation which had been organized by the defendant and others. The purchase was induced by a statement made by the defendant to the plaintiff that the company owned mines in Pennsylvania for which it had paid $400,000 in cash. This statement was false and fraudulent.

Relies on Smith v. Bolles

Good law ✅— No negative treatment on recordhow we know

Decided 1895-03-15

How this case has been cited

Cited by 12 later decisions — most recently April 2003

1 federal appellate · 2 district · 9 state decisions

40189519001910192019301940195019601970198019902000decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

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¶1The opinion of the court was delivered by

Dixon, J.

¶2In cases of this character, the true rule of damages is that the wrongdoer must answer for those results, injurious to the other party, which should be presumed to, have been within his contemplation at the time of the commission of the fraud. Crater v. Binninger, 4 Vroom 513; Smith v. Bolles, 132 U. S. 125.

¶3We think it clear in the present case that the defendant must have expected, when he made his fraudulent representation, that the plaintiff would probably retain the stock so long as he believed the representation to be true. The plaintiff did so retain'it until the. company failed, and during all that time the deceit practiced upon him was effective in controlling his conduct. The loss, therefore, actually resulting from the fraud, and which must be presumed to have been within the contemplation of the defendant, was the difference between the plaintiff’s investment and the value of the stock after the fraud ceased to be operative — that is, after the failure of the company. In the ascertainment of this difference, the market price of the stock at the time of the sale, or during the year succeeding, or at any time 'before the failure, was of no importance.

¶4The ruling of the trial court was correct, and. the judgment should be affirmed.

¶5For affirmance — The Chancellor, Dixon, Garrison, Lippincott, Mague, Reed, Boqert, Brown. 8.

¶6For reversal — The Chief" Justice, Gummere, Van Syckel, Sims. 4.

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