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Int'l Prods. Co. v. Erie R. Co. - 244 N.Y. 331, 155 N.E. 662 (1927)

Rule:

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.

Facts:

Plaintiff, expecting a valuable shipment consigned to arrive by steamer in New York, contacted defendant with respect to storing the goods prior to resale. While no formal contract was executed due to the complexities of the transaction, it was agreed that the goods would be stored by defendant upon arrival and that at some point a bill of lading would be issued. When plaintiff inquired of defendant where the goods were stored, defendant inadvertently informed plaintiff of the wrong location. Based on that information, plaintiff purchased insurance. The goods were subsequently destroyed in a fire and no insurance proceeds were available. Plaintiff then filed an action for damages based on defendant's negligent misrepresentations with respect to where it stored plaintiff's goods. A unanimous verdict was entered in favor of plaintiff and defendant appealed. 

Issue:

Was plaintiff entitled to recover for the damages it incurred in the fire?

Answer:

Yes

Conclusion:

The court affirmed judgment in plaintiff's favor because it found plaintiff had proved its cause of action on a theory of negligence based on its interpretation of defendant's conversation respecting the location of the stored goods. It reiterated that where plaintiff, an importer, expecting a consignment of goods by steamer, arranged with defendant, a common carrier, to receive them on its lighters, transfer them to its warehouse docks and then ship them upon order and, after arrival of the steamer, inquired of defendant where the goods were to be stored, stating that it desired the information for the purpose of obtaining insurance, and was informed that they were at a certain dock, whereupon it obtained its insurance giving the same information to the insurer, but as matter of fact the goods had not yet been received by defendant and when received one-half thereof were stored at another dock, which, thereafter, with the goods thereon was destroyed by fire, whereby plaintiff lost its insurance for misdescription, it may maintain an action against defendant to recover its loss on the theory of negligence. Thus, plaintiff was entitled to recover from defendant damages for the uninsured loss.

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