Opinion ID: 2041464
Heading Depth: 1
Heading Rank: 5

Heading: Reliance by the party to whom made.

Text: Defendants must have relied upon Youell's statements to their prejudice and injury. Here, the omission induced the outside financing of accounts receivable. When the Iceberg account was not paid, defendants took possession of the returned goods. They were then sued for conversion based upon a security interest they were led to believe did not exist. When defendants Johnson and Diamond were successful in securing accounts receivable financing from the Union Trust & Savings they were required to personally guarantee the financing the corporation received. Had these defendants known of plaintiff's security interest in the first place it is doubtful if they would have been willing to guarantee the financing furnished by Union Trust & Savings. If plaintiff's security interest in the accounts receivable were given priority over the security interest of Union Trust & Savings it would not require much imagination to conclude defendants had been prejudiced and injured financially. It is also doubtful Union Trust would have loaned Continental, Inc. money without some assurance on the part of plaintiff as to the priorities involved in the receivable financing. The trial court was correct in holding plaintiff was estopped from asserting its action against defendants for recovery and in dismissing plaintiff's petition. In view of the court's determination of this issue, the other issues presented for review will not be reached. The case is therefore Affirmed.