Opinion
January Term, 1901.
Frank Gibbons, for the appellants.
Thomas Carmody, for the respondent.
That the statements upon which the rating of the defendant's firm was based by the mercantile agency of R.G. Dun Co. were grossly false and that the plaintiffs relied upon such rating in giving the firm credit for the goods purchased upon the several occasions mentioned are facts concerning which there is and can be no serious dispute; and had such statements been made directly to the plaintiffs under circumstances which would fairly warrant the assumption that they were so made by way of inducing credit, there would, of course, be no question as to the right of the plaintiffs to maintain an action of this character; but whether such an action can be founded upon statements, however false, which were made to a third party, and which confessedly none of the plaintiffs ever saw, presents a much more serious question.
It is a fact so well understood that courts may well take judicial notice of its existence, that mercantile agencies are conducted for the express purpose of furnishing information to their subscribers and patrons of the financial standing of persons throughout the country who are engaged in any sort of business which involves individual credit; and it has long been the settled rule of law in this State that where a party makes a statement of his financial condition to one of these agencies, it may be assumed that he made it for the purpose of having the same transmitted by the agency to its subscribers, and that to any person who, after inspecting such statement, becomes a creditor of the party making the same and in reliance thereon, it has precisely the same force and effect as though it had been made by the debtor to the creditor in person. ( Eaton, Cole Burnham Co. v. Avery, 83 N.Y. 31; Converse v. Sickles, 16 App. Div. 49; Humphrey v. Smith, 7 id. 442.)
In the case last cited, which was decided by this department, the rule was thus stated: "If a dealer makes false and fraudulent representations in respect to his property to a mercantile agency for the purpose of establishing his credit, and those statements become known to and are relied on by persons extending credit, the representations have the same effect as though made directly by the dealer to the person of whom a purchase is made."
Although the precise question we are now called upon to determine was not raised in that case, the language above quoted indicates quite clearly that this court regarded actual knowledge by the creditor of the false statements made by his debtor as an essential element of the rule enunciated, and a moment's reflection will make plain the reason therefor.
Mercantile agencies do not always base their rating of a person's responsibility solely upon information obtained from the individual himself. Upon the contrary, it is well understood that they obtain such information from various sources, and this is especially true in cases where, as it often happens, a business man, for reasons best known to himself, declines to furnish the public with any statement of his financial condition.
It follows, therefore, that if the rule contended for by the plaintiffs were to obtain, a trader who had made a report to a mercantile agency as to his pecuniary standing might be held liable to arrest and imprisonment for a rating which, although based in part thereon, was, nevertheless, due in a much larger measure to information obtained from a business rival, a personal enemy, or some other equally unreliable source. ( Victor v. Henlien, 33 Hun, 549.)
In an elaborate and exhaustive opinion in a proceeding in bankruptcy, to which this defendant was a party and in which this precise question was most ably and carefully considered, it was said by the learned referee (Hon. CHARLES A. HAWLEY) that he had taken pains to examine every case bearing upon this question which had been brought to his notice, and that he found but one which sustains the proposition here contended for by the plaintiffs, and that arose in the State of Texas ( Aultman, Miller Co. v. Carr, 42 S.W. Rep. 614) and was a case in which the determination of the question was not necessary to its decision. ( Matter of Russell Birkett, Bankrupts, MS. opinion not yet published.)
We are not prepared to say that when a mercantile agency establishes the rating of a person's credit solely upon a false and fictitious statement in writing, furnished by the individual himself, a vendor of goods who parted with his property in reliance thereon and with knowledge that the same was based upon a statement thus obtained, would not have a cause of action against his vendee for fraud and deceit, even though he may not have actually seen the latter's statement; but in view of the fact that it is the well-known practice of such agencies to base their ratings upon information obtained from third persons, as well as from the person rated, we do say that a vendor cannot maintain such an action, even though so much of the information as may have been furnished to the agency by the vendee himself is absolutely false, unless such statement was in some manner communicated to the vendor and was relied upon by him when he parted with his property. Inasmuch as it does not appear that the plaintiffs have brought themselves within the rule thus stated, we think that the decision of the trial court should be sustained.
All concurred.
Judgment affirmed, with costs.