International Products Co.v.Erie R.R.Co.
Court of Appeals of New York,1927
244 N.Y.331,155 N.E.662
[Plaintiff,an importer,was expecting a valuable consignment of goods to ar-rive on the steamer Plutarch,and had made arrangements with defendants to receive and store the goods until they could be reshipped.The shipment was covered by insurance until it reached the warehouse,and plaintiff desired to insure it after that time.Giving this reason for its question,it inquired of defendant where the goods would be stored.Defendant,taking time to obtain the information,replied that the goods were docked at Dock F,Weehawken.From this reply,plaintiff reasonably inferred that the goods were already received and stored,and obtained its insurance on this basis.The goods arrived later and were stored at Dock D.They were destroyed by fire,and plaintiff was unable to collect any insurance payments because of the misdescription.Plaintiff seeks to recover from defendant the sum it would have received if defendant’s statement had been correct.The trial court directed a verdict for plaintiff,which was affirmed by the Appellate Division.Defendant appeals.]
ANDREWS,J.Confining ourselves to the issues before us,we eliminate any theory of fraud or deceit….We come to the vexed question of liability for negligent language.In England the rule is fixed.“Generally speaking there is no such thing as liability for negligence in words as distinguished from act.” Pollock on Torts (12th Ed.) p.565;dicta to the contrary may be found in earlier cases….But since Derry v.Peek,L.R.14 App.Cas.337,although what was said was not necessary to the decision,the law is clearly to the effect “that no cause of action is maintainable for a mere statement,although untrue,and although acted upon to the damage of the person to whom the statement is made unless the statement be false to the knowledge of the person making it,” or,as said elsewhere,“we have to take it as settled that there is no general duty to use any care whatever in making statements in the way of business or otherwise,on which other persons are likely to act.” …
These cases have not been without criticism.The denial,under all circumstances,of relief because of the negligently spoken or written word,is,it is said,a refusal to enforce what conscience,fair dealing,and the usages of business require.The tendency of the American courts has been towards a more liberal conclusion.The searcher of a title employed by one who delivers his abstract to another to induce action on the faith of it must exercise care.So must a physician who assures a wife that she may safely treat the infected wound of her husband,or hired by another,examines a patient,and states the result of his diagnosis.So of a telegraph company stating that a telegram was delivered when in fact it was not.And the liability of such a company to the receiver for the erroneous transcription of a telegram has also sometimes been placed on this ground.
In New York we are already committed to the American as distinguished from the English rule.In some cases a negligent statement may be the basis for a recovery of damages.A reference is made to the question in Carpenter v.Blake,75 N.Y.12.We intimated that a physician would be liable for negligent advice given to a patient after his discharge,but this suggestion was not decisive of the point we now consider….Then came Glanzer v.Shepard,233 N.Y.236.A public weigher hired by the seller to weigh goods,realizing that the buyer would rely on his certification in paying therefor,was held liable for erroneous statements contained therein….
The negligence was inferred from the issuance of a false certificate.That was the wrong for which a recovery was allowed.“Diligence was owing,not only to him who ordered,but to him also who relied.”(https://www.daowen.com)
Obviously,however,the rule we have adopted has its limits.Not every casual response,not every idle word,however damaging the result,gives rise to a cause of action….Liability in such cases arises only where there is a duty,if one speaks at all,to give the correct information.And that involves many considerations.There must be knowledge,or its equivalent,that the information is desired for a serious purpose;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.Finally,the relationship of the parties,arising out of contract or otherwise,must be such that in morals and good conscience the one has the right to rely upon the other for information,and the other giving the information owes a duty to give it with care.An inquiry made of a stranger is one thing;of a person with whom the inquirer has entered,or is about to enter into a contract concerning the goods which are,or are to be,its subject,is another.Even here the inquiry must be made as the basis of independent action.We do not touch the doctrine of caveat emptor.But in a proper case we hold that words negligently spoken may justify the recovery of the proximate damages caused by faith in their accuracy.
When such a relationship as we have referred to exists may not be precisely defined.All that may be stated is the general rule.In view of the complexity of modern business,each case must be decided on the peculiar facts presented.The same thing is true,however,in the usual action for personal injuries.There whether negligence exists depends upon the relations of the parties,the thing done or neglected,its natural consequences,and many other considerations.No hard and fast line may be drawn.
Here,as we view the facts,the duty to speak with care,if it spoke at all,rested on the defendant.We have [defendant] about to become the bailee of the plaintiff’s goods;the inquiry made by [plaintiff] with whom [defendant] was dea-l ing for the purpose as it knew of obtaining insurance;the realization that the information it gave was to be relied upon,and that,if false,the insurance obtained would be worthless.We have an inquiry such as might be expected in the usual course of business made of one who alone knew the truth.We have a negligent answer,untrue in fact,actual reliance upon it,and resulting proximate loss.True,the answer was not given to serve the purposes of the defendant itself.This we regard as immaterial.
If there was negligence justifying a recovery,we cannot hold the plaintiff guilty of contributory negligence as a matter of law.Whether or not it should have discovered the error by an inspection of the bill of lading when it received it was a question of fact….
The judgment appealed from should be affirmed,with costs.