Court Opinion

ID: 5312122
Source: CourtListenerOpinion
Date Created: 2022-01-08 03:54:40.103898+00
Date Added: 2024-06-11T08:29:13.595752
License: Public Domain

Finch, J. (dissenting).
Assuming that the defendants may be held liable for the negligence of their employees where they undertake a duty to a definite plaintiff (Glanzer v. Shepard, 233 N. Y. 236), or to a definite class (Doyle v. Chatham & Phenix Nat. Bank, 253 N. Y. 369), yet, for the following reasons the defendants are not liable to this plaintiff: First, because they undertook to make only a “ balance sheet audit ” at the request of their client; second, because in their certificate the defendants purported only to furnish their opinion based upon an examination in connection with “ the information and explanations given us.” But even more important, the defendants furnished such a report and certificate without reference to any particular person or class of persons.
The plaintiff seeks to liken the facts in the case at bar to a case where the defendants were to make an audit which to their knowledge was for a definite plaintiff, to induce such plaintiff to make loans thereon. (Glanzer v. Shepard, supra.) This record does not sustain such a contention. The courts have not gone to the length of holding that defendants in a case like the case at bar can be held hable in negligence to the whole world, or, as has been aptly said, hable for “ negligence in the air.”
In other words, not only the purpose for which the statement is to be used, but the person or class of persons who is to rely *587thereon, must be definite to the knowledge of the defendants. The plaintiff relies upon the stipulation in the record that the defendants “ knew generally that these reports would be used as financial statements to banks or to creditors or to stockholders or to purchasers or sellers.” In accordance with the authorities, this general knowledge is not sufficient.
As Judge Andrews said in International Products Co. v. Erie R. R. Co. (244 N. Y. 331), speaking of the information given, “ that he to whom it is given intends to rely and act upon it; that if false or erroneous he will because of it be injured in person or property.” In Courteen Seed Co. v. Hong Kong & S. B. Corp. (245 N. Y. 377) Judge Pound writes: “It [the defendant] did not deal with appellant, had no relations with it and was under no duty of care to it.” (See, also, Savings Bank v. Ward, 100 U. S. 195.)
The professional man, be he accountant or otherwise, certifies for his client and not for all the world. If the client makes it clear to such a man that the statement is to be used in a particular transaction in which a third party is involved, such circumstance should create a duty from the professional man to such third party. If the accountant is to be held to an unlimited liability to all persons who may act on the faith of the certificate, the accountant would be obliged to protect himself by a verification so rigid that its cost might well be prohibitive and a limited but useful field of service thus closed to him. The smallness of the compensation paid to the defendants for the services requested is in striking contrast to the enormity of the liability now sought to be imposed upon them. If in the case at bar the plaintiff had inquired of the accountants whether they might rely upon the certificate in making a loan, then the accountants would have had the opportunity to gauge their responsibility and risk, and determine with knowledge how thorough their verification of the account should be before assuming the responsibility of making the certificate run to the plaintiff.
It also appears in the case at bar that the loss of the plaintiff resulted because of its own contributory negligence in failing to check the collateral. (Craig v. Anyon, 212 App. Div. 55; affd., 242 N. Y. 569.)
In so far as the claim of actual fraud is concerned, there is no proof in this record sufficient to support such a finding by a jury. The court, therefore, properly dismissed this cause of action. (Civ. Prac. Act, § 457-a.) This is so, even assuming that personal connivance and fraud on the part of the employees of defendants could be held within the scope of the authority given to these *588employees by the defendants, which at least is doubtful. (Henry v. Allen, 151 N. Y. 1; Credit Alliance Corp. v. Sheridan Theatre Co., 241 id. 216; Martin v. Gotham Nat. Bank, 248 id. 313.)
It follows that the judgment and order should be affirmed.
Martin, J., concurs.
Judgment and order modified by reversing so much thereof as sets aside the verdict and dismisses the amended complaint as to the first cause of action, and by directing that the verdict be reinstated and judgment entered thereon, with costs to the plaintiff, and as so modified affirmed, without costs.