*1 520 Tiñóle v. Bibkett. une, [J «
Statement of case. 171. [Vol. Thomas Tindle et al., v. Clarence T. Appellants, Birkett,
Respondent. Agency — Mercantile False Statements Made for Thereto Pur- n — pose Obtaining Party Injured Thereby May Credit Maintain Action for Fraud Person Made Who Statements. a knowingly Where member a firm made false and fraudulent state- in writing ments a agency regarding to mercantile the financial condition purpose assets of his firm for obtaining a favorable subscribers, it in the agency reference books furnished to its a who, subscriber to relying solely such such without knowledge, other sells on credit and delivers such to firm, the members of adjudged bankrupts upon which were their own. petition for, paid before the maintain an action obtaining deceit, goods by although fraud and the statements were- personally not made to the directly, vendors agency, but them, never saw rating,. the result them embodied Birkett, 450, App. Tindle v. 57 Div. reversed. 16, ; (Argued May 17, 1902.) 1902 decided June Appeal a from Division of the- Court the fourth entered Supreme judicial department, 26, favor of defend- 1901, February affirming judgment ant entered dismissal of the the court at Upon complaint by Trial Term.
The nature of the action far so facts, material,, anfl are stated in the opinion.
Frank Gibbons for
The defendant is
liable,
appellants.
he made contributed in
representations
any degree
act,
influence,
no matter
to induce
what
party
or
also
facts
contributed
so induce
may have
representations
(Shaw v.
8
Stine,
him.
Bosw.
Morris v.
26
157;
Wells,
v.
N.
11;
;
N. Y. S. R.
ested, him credit. v. their’guidance (Eaton 83 Y. A merchant Avery, N. state 31.) may rely upon ment to a the statement mercantile given agency although itself is not communicated. v. Misc. Sickles, 17 (Converse v. N. 22 Altman v. 169; Babcock, 481; C. Co. Rep. Hun, 42 S. W. Carr, Rep. 614.) Downs Thomas Murray Carmody respondent.
The
Russell & Birkett
Dun &
Co.
ratings given
by
by
Bradstreet were
made
not based
Russell
by
& Birkett to these
v.
83 N. Y.
(Eaton Avery,
31;
agencies.
v.
Victor
33
Even if the statements
Henlien,
Hun,
550.)
the commercial
were false when
and made
made,
with
fraudulent
cannot
inasmuch
intent,
succeed,
as none of these statements was ever seen
nor
them,
had
by
statement whatever had
they
been
any
any
knowledge
Russell & Birkett to the
v.
by
(Eaton
agencies.
Avery,
83 N. Y.
v.
Y. 353
31; Macullar
99 N.
; Con
McKinley,
verse v.
Misc.
v.
Sickles,
169;
17
S. Nat.
Rep.
Bradley
Bank,
46
Div.
N. C.
v.
22
Babcock,
Hun,
Co.
App.
550;
481;
Altman v.
42 W.
v.
S.
33
Carr,
;
Henlien,
614 Victor
Rep.
It
Hun,
is essential not
that the statement be false
550.)
when
it
be shown that
ve'ndor
made, but must
relied upon
it,
true.
58
to be
v.
N. Y.
Guest,
believing
(Taylor
262;
45
Oberlander v.
N. Y.
The
of time
Spiess,
175.)
length
from the
of the statements
the mer
elapsed
receipt
by
cantile
the date of the sale
of
ques
tion render
such
even
fraudulent
inoperative
statements,
when
v.
made.
Opinion Court, per of 1-71. [Vol. action in an to recover ,J. The plaintiffs sought O’Brien, fraud and deceit based practiced upon allegations of three bills them defendant, price to a firm of such fraud to sell were induced firm was the defendant was member. dealers of which died another person composed action was of the court the before the order trial, At the trial before continued defendant. and their coun- court and were nonsuited law sel and this exception presents excepted affirmed on the case. The appeal. *3 the facts and the There is no about ques- dispute practically the the is whether tion proof presented by appeal plaintiffs’ three the The bills or tend to sustain action. did custain the firm of were sold and delivered by plaintiffs goods 1898, dates November 30, at. respectively: following in 1899, and amounted 25th, and March 1899, 24, January the 15tli of follow- On day April $901.86. aggregate firm were of 'the the last sale both of members their in the Federal on own petition bankrupts adjudged months court. About prior filing petition eighteen for the the defendant, the 16th of 1897, and on September, of R. mercantile of agency securing rating by purpose a state- made and delivered to Dun & Co., G. agency firm, the financial of in as to condition ment writing than a net More $152,858.22. which showed assets of year 1898, and on the' 2d of November, thereafter reply day defendant wrote a letter from the agency, request statement and added reiterated former which practically firm and of the was the business increasing large, before 1899, later and on March 9th, Still just profitable.” of from the of the last two bills the purchase defendant called per- agency upon representative that there him a statement received from verbal sonally in the financial condition of the material had no been change the firm a of from $125,000 The firm. rating gave agency and never Sub- was maintained to. which $200,000, changed. Tixdle Biekett. O’Briek, Opinion Court, per 1ST.Y. Rep.] the same firm Brad- to the stantially rating given street though like statements and upon representations, made at an earlier and the at all times knew date, that the credit of the firm was so rated in reference books sent these to merchants and business people. both had and used these reference books of plaintiffs in their when defendant business, applied credit consulted these books and in reliance on the cor- they rectness without sold rating, knowledge, delivered credit. question upon which at least as to Dun upon were ratings given, false. The learned court cor- below grossly described this of the case in these words which rectly phase we can well very adopt: “ That the statements which the of the defend- ant’s firm was based the mercantile Dun R. Gr. & Co. were and that the false, relied grossly such the firm credit for the goods purchased the several occasions are facts mentioned, concerning there and can no serious such had dispute, statements been made to the under circum- directly stances which would warrant the assumption fairly were so made there would, of by way inducing *4 no be course, as to of the main- to question right tain an of this action character.”
But the learned court held that since false and fraud- ulent statements were to the plaintiffs personally and but to the since defendant, and directly agencies, never the statements themselves, saw books, them result of in the reference action could not maintained. That one merchant defraud another .be may under modern business methods as a false just effectually by and fraudulent statement to a commercial as in no one can doubt. That did actu- way deceive defraud the thus into ally plaintiffs by putting in the (cid:127)circulation business world a fraudulent ficti- false, tious to his true commercial stand- express rating purporting Tindle '
Opinion Court, per O’Bribk", of the [VoL-171. and financial clear. mere ability equally Disregarding forms and it cannot methods, be doubted that the defendant false and deceitful spoke words to the plaintiffs through as if had met face to face just effectually and. the statements had been made directly personally. buyer become liable to the seller in goods fraud, may have met never or seen each and no although they other, per- sonal communication that is false or fraudulent has passed between them. If the former does what this defendant just did and a fraudulent that it should procures rating, intending be to the business and taken published as true, community that is a fraud who relies and acts person But it is not this damage. necessary argue one since it has original been decided this deliberately court. C. v. Eaton, & B. Co. it was held (83 Avery 31)
that when a member of a firm makes statements to a commer cial which he knows to be false as to the financial con that, dition of the with the intent shall firm, communicated to interested persons pecu ascertaining of the firm, thus to niary responsibility intending procure credit and to defraud such and such statements are persons, communicated to one who reliance sells thereon firm on an action for deceit be maintained in favor the seller has buyer the fraud. suffered That decision is controlling at since cases are in their case two almost identical bar, the. and all the the learned court below facts, objections urged by this case were answered to recovery fully upon principle The court states the case was new in its authority. in the involved, facts but old and the cases cited sus principle in a tain statement. The same was decided more principle Sickles, 142 N. Y. recent case. (Bliss 647.) in a this case like are recovery urged objections *5 It is said that it would business men at untenable. put quite Ho one .need have the commercial agencies. any mercy'of man can be affected unless he since no business that, fears of Tixdle Bartlett, Opinion per Bep.] 2ÑT.Y. to the busi- information
makes use of such an give he that to show order ness world of his financial condition him harm is it is and then impossible worthy false for he knows to be unless he makes statements that he reason there is no does, why fraudulent purpose, also, So, has suffered should not to one who thereby. respond from it information is said procure That than credit. sources the statement of seeking parties will be is one be but there little so, danger If his own. other than liable fraud foi false statements that he never made the defendant in this case could show little defeat- statements referred to he would have difficulty in the reference this action notwithstanding high rating books. A who is innocent can always protect really party others. himself the unauthorized statements of this case there was a false and excessive clearly rating the statements made the defendant, was justified by fraudulent admitted that these statements were false and and that relied for a
credit. this state of facts is a sufficient basis Clearly, suf- fraud and deceit. The certainly proof charge to the and hence ficient to case carry nonsuited. improperly and a new trial should be reversed granted, to abide the event. costs I with the result reached in pre- agree
Bartlett, the trial for reversal. It was error for opinion clearly vailing the affirmance of to nonsuit judg- judge entered Division cannot ment thereon by Appellate sustained. deal with am of the that we should
I however, opinion, to sustain induced the Division it is said : that learned the nonsuit. In the court opinion their Mercantile do not base per- always from obtained information son’s responsibility solely upon it is well understood himself. individual contrary, Upon *6 526 Tindle v. Bibkett.
Opinion per Bartlett, 171. [Yol. obtain such information from various they sources, this is true in cases a especially it often where, happens, man, business for various reasons best known himself, to declines to furnish the with statement of public financial condition.”
It seems to be conceded that the defendant made repre- sentations to the mercantile of B. G. Dun & Com- agency that were false and to calculated mislead the pany grossly who consulted the to defendant ratings given by that agency. Division seems to have held that the plain-
tiffs were not authorized to these for rely upon ratings reason were based of upon representations defendant and also information received to defend- commercial ant’s from outside sources. standing of the court further below states: It opinion follows, that, if the therefore, rule contended for were trader has made a obtain, to mercantile report as to his be held pecuniary might liable standing arrest and imprisonment based which, rating, although was thereon, nevertheless due in a much part measure larger information obtained from business rival, a personal or some other unreliable source.” enemy ecpially If fact the commercial base country their of merchants not ratings representations information latter, obtained from other renders such sources, unavailable to contem- ratings persons information obtained plating would be little value. that the I am of were entitled to submit opinion whether the false grossly representa- the defendant tions made to the mercantile if not the sole causes, one of which led to cause, inducing the sale 62 question. (Morgan N. Skiddy, Y. 319.) the case of Hubbard v. N. Briggs (31 Y. which 518), to recover an action damages fraud, alleged Rep.] Yank, opinion,
3SLY. Dissenting per consisted in false the sound- representations making concerning ness and of the Miller’s solvency Bank of Clyde, whereby *7 was induced to dollars plaintiff subscribe hundred fifty-three to the stock and to his bond and mort- corporation give for the amount of gage his this court said subscription, (p. 532): “ It was to have the sustained the action enough the for have the found that jury plaintiff moved his so that he would without them by representations not have subscribed for the stock, although representations others had by also influence mind. It could upon not be affirmed, as the in the law, matter case upon proof that the defendant’s not the affirmations were cause inducing of the if the and, plaintiff’s not, subscription, question properly to determine.” belonged It is for a to sell has been induced competent plaintiff, in reliance a mercantile upon ratings agency, show he can its officer character of the by rep- precise resentations made to it as debtor, and such information by have obtained this from to follow may sources; also, that these one of up by proof representations inducing causes that led to the sale. If this of fact is properly will submitted to there evidence, jury upon competent no a trader will be to arrest and danger impris- subjected onment a of a rating representations resting rival, business a third or no personal enemy, party, having interest in the transaction. of mercantile' (dissenting).
Vann, is its conclusion to the status as financial of the merely person to whom it relates. In this the conclusion was based case, statements furnished the defendant and partly upon by partly from had information derived other sources. There been a course of and the between long dealing parties, statements made an itemized defendant, which included by of assets not communicated liabilities, were enumeration to and were neither known to nor relied upon is them when the credit. It unsafe, they gave . opinion, Vann,
Dissenting per 171. [Yol. but a violation of sound recovery principles, permit with the unless deceit, severe follow, consequences the evidence connects the false statements with directly to have with his or person deceit, alleged practiced duly authorized within the of his A authority. agent acting scope mercantile is make its mere not such an as to agent inference as to the effect of the debtor’s binding him. Its far is limited concerned, so authority, to the or the transmission of his as made statement, him, substance to its When it its thereof, subscribers. opin gives it does not act as his ion, simply, agent agent, Eaton, subscriber. B. C. & Co. Avery (83 the statements made were communicated 31) purchaser to the and this court not the mere seller, *8 “ condition of said: a statement as to the financial By making his firm it what to to such instructed say virtually ” what should of; is, pur inquired report chaser what he said. not its conclusion as to effect of said, said in Macullar v. McKin we case, Commenting and an intended N. Y. there was direct ley (99 353, 358), connection between the credit obtained.” representation So in the detailed statement Bliss Sickles (142 647) reached seller through writing, purchaser, third it was made for whom purpose, person, thus became the credit the direct foundation of given.
The tender the law has for which liberty personal regard will of a citizen the arrest and permit imprisonment without com- mere of a commercial the rat- munication of the as stated him, facts, was based. I dissent from the about to be pronounced affirm the Division vote to reasons given in its opinion. JJ. J., Ch. (and Bart- Haight, Martin,
Parker, Gray, Vann, J., concur with O’Brien, J.; lett, J., memorandum), dissents. etc. reversed,
Judgment