Opinion ID: 1562179
Heading Depth: 1
Heading Rank: 1

Heading: Reliance on Statement.

Text: The statement here intended is a financial statement furnished to Dun & Co., a commercial agency, and purporting to show the financial condition of the bankrupt as of December 31, 1931. The situation as to reliance upon this statement differs in some respects as to these various petitioners. The evidence shows the following: The American Snuff Company made its sale on April 5, 1932. It relied on the published statement of Dun & Co., of January 1, 1932 (based, in part, upon the above financial statement) and upon the report of the bookkeeper of the snuff company that prior accounts with the bankrupt had been promptly paid. The Pennsylvania Rubber Company made its sales upon February 10, March 16, and April 12, 1932. It relied upon a statement sent at its request by the bankrupt, about the middle of January, preceding. This statement was a copy of the above financial statement, of December 31, 1931. Aron & Co. made its sale on April 6, 1932. It relied upon the Dun report based upon the above financial statement. R. J. Reynolds Tobacco Company made its sales on April 9th and 11th. It relied on the Dun rating as shown in its report based, in part, upon the above financial statement. The reliance of the Pennsylvania Rubber Company was directly on the financial statement. The reliance of the other companies was, in whole or part, upon the Dun statement which was based, at least in part, upon the financial statement. When one makes a financial statement to a mercantile agency it is for the known and sole purpose of being used by the agency as a basis or one of the bases of its reports to its correspondents as to the financial standing and credit of the one furnishing the statement. Correspondents of such an agency place reliance upon the reports of an agency as to such credit and financial standing. The only purpose of making such statement is to affect the judgment of the agency and, through it, of its correspondents as to such credit and financial standing. The normal effect follows the above purpose. Therefore, a false financial statement made to such an agency and used by it as a basis or one of the bases of its reports to its correspondents is, effectively, a statement made direct to any of such correspondents as act in reliance thereon. In the instant case, the Pennsylvania Rubber Company received the statement direct. As to the three other petitioners the effect of the statement came through the mercantile agency. In legal effect, there is no difference in the result. The evidence here establishes reliance upon this financial statement.