Smith v. London Assurance Corp.

| N.Y. App. Div. | Dec 15, 1905

Hooker, J.:

. The action is to recover for services rendered to the defendant by the plaintiffs in their capacity’ as public accountants. The answer admits a small payment o.n account, as alleged in the complaint, avers that such payment was in full of the plaintiffs’ claim, and includes a counterclaim for a large sum of money embezzled by one of the defendant’s employees, which embezzlement the defendant claims would not and could not have occurred except for a breach of plaintiffs’ contract of employment. The plaintiffs demurred to the counterclaim on the ground that it does not state facts sufficient •to constitute a cause of action, the demurrer -was overruled,, and plaintiffs appeal.

The plaintiffs do not challenge the proposition of- law advanced by the defendant that public accountants now constitute a skilled professional class and are subject generally to the same rules of liability for negligence in the practice of their profession as are members of other skilled professions. And such is doubtless the law. Cooley states the rule governing the measure, of such liability in this language: “ Every man who offers his services to another and is employed, assumes the duty to exercise in the employment such skill as he possesses with reasonable care and diligence. In all those employments where peculiar skill is requisite, if one offers his services he is understood as holding himself out to the public as possessing the degree of skill commonly possessed by others in the same employment, and if his pretensions are unfounded he commits a species of fraud upon every man who employs him in reliance on his public profession. But no man, whether skilled or unskilled, undertakes that the task he assumes shall be performed successfully and without fault or error; he undertakes for good faith and integrity but not for infallibility, and he is liable to his employer for negligence, bad faith or dishonesty, but not for losses consequent upon mere errors of judgment.” (Cooley Torts [2d ed.], 777. See, also, Carpenter v. Blake, 50 N.Y. 696" court="NY" date_filed="1872-12-24" href="https://app.midpage.ai/document/carpenter-v--blake-3577650?utm_source=webapp" opinion_id="3577650">50 N. Y. 696; S. C., 75 id. 12; Link v. Sheldon, 136 id. 1; Pike v. Honsinger, 155 id. 201.)

Although the counterclaim is inaptistically drawn and deficient in logical order, we believe that it does state sufficient facts to make out a cause of action. In the 10th paragraph of the answer, near the final statements of the counterclaim, is to be found an allegation that in the agreement between the parties it “ was expressly stipulated that there should be a frequent checking by the plaintiffs of the cash account of the New York branch of the defendant, and a verification of the items appearing thereon.” Reverting to the fii'st words of the 9th paragraph an averment is. found that the plaintiffs “ have negligently and willfully failed to examine and check in particular the cash account of the New York fire office of the defendant and have failed to verify the said cash and agency accounts.” Then follows the allegation that Scott, its cashier, from time to time embezzled large amounts of money paid to him as such cashier, the embezzlement being assisted by his falsifying entries in defendant’s books and practically its cash books. In the 11th paragraph it is alleged that the defendant’s losses from Scott’s embezzlements and defalcations were due to the negligence of the plaintiffs to .perform their agreement with the. defendant in the- manner-stipulated. - - " .

These- allegations,’ with the facts that may he- implied from them by reasonable and fair intendment, sufficiently plead a. valid contract, its breach and the resultant damage,, and require a. reply from the'plaintiffs. Had an examination, and checking of-the Hew York office cash account, performed, with that degree of skill ¡and care demanded' by the rule -which has been noticed,, resulted in preventing defendant’is.loss, in whole orín part, thé plaintiffs should respond in damages; for it: must have been within the reasonable contemplation of the parties at the time of -making the contract, and so it is iiiferentially alleged in the'counterclaim that one of the objects of the frequent checking of the defendant’s cash--account of dhe Hew York branch ánd a verification of the items thereof was to prevent,, or at least arrest, just such practices as it is cláimed Scott indulged, in, .and the loss the defendant has sustained naturally flows from the breach of the contract'it has plead. ' '

The interlocutory judgment -should,, therefore, be affirmed, with costs, with leave to the plaintiffs to reply upon tlie'usual terms. .

Hirschberg, P. J., Woodward, Rich and Miller, JJ., concurred.

Interlocutory judgment overruling demurrer to the plaintiffs’' ■'counterclaim affirmed',, with- costs, with leave to the plaintiffs to reply within twenty days on payment.