This is a bill in equity in which the plaintiff seeks to rescind the sale of a business because of fraud. The judge made findings of material facts of which the following is a summary: In August, 1954, the defendant was the owner of a business in Fairhaven which he conducted under the name of "F. & B. Cutrate & Fleet Bag Co." The business consisted of a small dry goods store and an adjoining shop in which the defendant manufactured scallop bags.
The plaintiff took possession of the store and shop and undertook to carry on the business. There was no cloth for the manufacture of scallop bags available at this time and the plaintiff made "repeated requests of the defendant to obtain cloth for him, relying upon the defendant's representation that cloth was available and that he, the defendant, would obtain it for him." The defendant at various times "agreed to take the plaintiff to cloth dealers, but never kept appointments made for that purpose, and finally under a pretext that news of the sale by him to the plaintiff had leaked out, because of which dealers would not sell cloth, told the plaintiff that he could not obtain the cloth."
The "representations made by the defendant, relative to the availability of cloth in the market, and particularly at the price named by the defendant to the plaintiff prior to the sale were misrepresentations, either intentionally or negligently made, under circumstances for which the defendant was responsible." After making the foregoing findings the judge referred the case to a master "to determine the fair value as of February 7, 1955,
After hearing the parties, pursuant to the foregoing order of reference, the master filed a report. It was agreed that the machinery and equipment involved in the sale had been submerged in flood waters resulting from the hurricane of August 31, 1954. The value of this property was determined,
An interlocutory decree was entered confirming the master's report and overruling the defendant's exceptions thereto. A final decree was entered adjudging that the sale be set aside and awarding damages to the plaintiff in the sum of $2,753.35. The defendant appealed. The evidence is not reported.
1. Contrary to the defendant's contention, we are of opinion that on the findings the representations as to the availability and price of the cloth concerned matters susceptible of knowledge and were stated as facts and not as opinion and hence were of the sort that would support a decree for rescission. They were "misrepresentations, either intentionally or negligently made," and the plaintiff relied on them. If the statements were knowingly false there was plainly a basis for rescission. Rykiel v. Sklaver, 259 Mass. 608, 611. Lang v. Giraudo, 311 Mass. 132, 138. Verville v. Mason, 334 Mass. 322. But a false, though innocent, representation which concerns a matter susceptible of knowledge and is stated as a fact and not as opinion may afford the basis of rescission. Rudnick v. Rudnick, 281 Mass. 205, 208. Yorke v. Taylor, 332 Mass. 368, 371, and cases cited. The defendant's contention that relief is precluded by the plaintiff's failure to investigate the truth or falsity of the defendant's representations is without merit. Yorke v. Taylor, supra, at pages 372-374.
2. The damages awarded to the plaintiff were determined on the basis of the difference in value between what the plaintiff paid and what he actually received. Relying on the rule of damages applicable in actions of tort for deceit, the defendant argues that the rule applied by the judge
We are mindful that the judge found that at no time did the plaintiff restore or offer to restore to the defendant what he had received from him. Ordinarily one seeking rescission of a transaction must restore or offer to restore all that he received under it. Fitch v. Ingalls, 271 Mass. 121. Jurewicz v. Jurewicz, 317 Mass. 512, 517. Restatement: Restitution, § 66. This requirement is applied with considerable strictness at law (see, for example, Bassett v. Brown, 105 Mass. 551, 558; Marston v. Singapore Rattan Co. 163 Mass. 296, 302; Owen v. Button, 210 Mass. 219, 222) but the rule is more liberal in equity and it has been held that, where complete restoration is not possible, rescission may, nevertheless, be granted upon such equitable conditions as would amply protect the rights of the defendant. Thomas v. Beals, 154 Mass. 51, 55. Putnam v. Bolster, 216 Mass. 367, 372. United Zinc Co. v. Harwood, 216 Mass. 474, 477-478. J.C. Penney Co. v. Schulte Real Estate Co. Inc. 292 Mass. 42, 46. Lang v. Giraudo, 311 Mass. 132, 139. The final decree awarding the plaintiff the return of the purchase price credited the defendant with the fair value of the property transferred by him. It was not possible for the plaintiff to restore the property acquired, for a substantial portion of it had been sold prior to the hearing. That which had been damaged by the flood was valued on the basis of its condition prior to the flood. In these circumstances we are of opinion that the plaintiff's failure to restore what he had received did not preclude his obtaining the relief granted by the decree below.
In this respect the case at bar bears considerable resemblance to the case of Putnam v. Bolster, 216 Mass. 367. In
3. The defendant finally urges that the judge erred in confirming the master's report. Some of the objections urged against confirmation have already been discussed. The other objections have been examined and we find no merit in them.
Interlocutory decree affirmed.
Final decree affirmed with costs of appeal.