Ultramares Corporation v. Touche case brief

Ultramares Corporation v. Touche case brief summary
174 N.E. 441 (N.Y. 1931)

CASE SYNOPSIS

Plaintiff and defendants cross-appealed the judgment of the Appellate Division of the Supreme Court in the First Judicial Department (New York), which modified and affirmed judgment in favor of defendants setting aside plaintiff's verdict and dismissing the complaint in plaintiff's action for negligent and fraudulent misrepresentations respecting an audit.

CASE FACTS

• Plaintiff brought suit in tort for damages suffered through the misrepresentations of defendants through negligence and fraud, respectively. 
• Defendants had been employed by a third-party to prepare and certify a balance sheet exhibiting the condition of third-party's business. 
• Defendants were aware third-party would use its certificate of audit to obtain credit for the operation of its business and in other financial dealings. 
• Although capital and surplus were certified to be intact, in reality, both had been wiped out and the business was insolvent. 
• On the faith of defendants' certificate, plaintiff made several loans to defendant. 
• Following judgment, the parties cross-appealed the appellate court's dismissal of plaintiff's complaint, inter alia. 

HOLDING
On cross-appeal, the court found that if defendants had made statements as true without knowledge on the subject, liability for fraud could ensue.

CONCLUSION

Defendants' appeal on the first cause of action and plaintiff's appeal on the second cause of action were reversed, because the court of appeals found if in certifying the information, defendants made a statement as true to their own knowledge when they had no knowledge on the subject, liability for fraud could ensue.

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