Munro v. Bradstreet Co.

Laughlin, J.: On April 30, 1913, the plaintiff, who resided in Chicago, Ill., became a subscriber to the defendant’s commercial agency for [295] the period from May 1,1913, to June thirtieth of the following year. In consideration of the payment of $100, the contract entitled the plaintiff to the use of the books of ratings to be issued by the defendant in July, 1913, and January, 1914, and obligated it to furnish to him not to exceed one hundred reports with respect to ratings of merchants and others doing business within the territory embraced in the contract, which included the city of New York; and provided that such reports were to be based on “ information of record in its offices or obtained within ” the period covered thereby. The defendant had obtained a statement in writing from Jackson & Sulzer, a firm doing business at 27 West Twenty-sixth street, New York city, as furriers, on February 8, 1913, which showed that their assets exceeded their liabilities by $15,064.53; and the defendant’s book, presumably the issue of July, 1913, although that fact is not clearly proved, showed that Jackson & Sulzer had a rating of from $10,000 to $20,000, second grade of credit. Prior to August 28, 1913, the plaintiff had had no dealings with this firm. Negotiations were opened between one O’Neill, his agent in New York city, and Jackson & Sulzer for the sale to them by the plaintiff of 450 dyed black fox pelts. The firm offered $1,650, and on the morning of August 28, 1913, O’Neill wired the plaintiff of the offer. The plaintiff then looked at the firm’s rating in the defendant’s hook, and not being satisfied with it, telephoned to defendant’s office in Chicago and asked one Brady, who answered the telephone, for a report on the firm, and was informed that the defendant had no report on file in its Chicago office, hut that if the plaintiff would pay the expense of a telegram they would wire New York “to get an investigation” of the firm. The plaintiff was called up on the telephone later the same day by defendant’s Chicago office and informed that they had received a telegraphic report on the firm and that “their man” had called on them. At his request the report, which purported to show their assets and liabilities, was read to him over the telephone, and he was informed that a representative of defendant had called on the firm and received this information, and was, in effect, assured that their credit was good for the purchase price of the pelts. The defendant’s [296] Chicago office sent plaintiff a copy of the telegraphic report pursuant to his request, and he received it the next morning. It was as follows: “ 190-8-28-13. Telegram. “Jackson & Sulzer — Furs — New York City, N. Y. “We learn .to-day by telegraph as follows: “ They state in substance as follows: ‘ Assets $58,500.00; liabilities $43,500.00.’ “Statement is corroborated by the trade, they are doing a fair and deemed safe business, are well regarded and deemed worthy of credit, and pay promptly so far as known here. “.................................Aug. 29, 1913.” He then wired O’Neill to close the contract, and the goods were sold to the firm on credit on August 29,1913. After first telephoning to defendant’s Chicago office, and the same day or the following morning, the plaintiff filled out a form or ticket furnished by defendant calling for a general report by wire, and stating that a detailed report might follow, with respect to the firm. It does not appear that anything was said with respect to this in the telephonic conversation. About two or three weeks later defendant mailed a detailed report to the plaintiff, including a copy of the firm’s statement of February 8, 1913. The credit given was one-half for five months and one-half for six months, and on September 30,1913, defendant telephoned to the plaintiff a report, evidently received from New York, that bankruptcy proceedings against the firm had been commenced by its creditors, and it mailed a copy thereof to him. This action is brought on the theory that the defendant was guilty of a breach of its contract by gross negligence amounting, in effect, to fraud, in representing that it had obtained a special report on August 28, 1913, with respect to the firm’s financial condition, whereas, as was alleged. and shown, the defendant had at that time no information excepting the original statement of February 8, 1913, which was shortly after the firm commenced business. The evidence was uncontroverted that the defendant made no special investigation or inquiry in August, pursuant to the plaintiff’s application. The plaintiff [297] had applied for and obtained about thirty reports on other merchants before, but had not asked for any special investigation or report by telegraph. It would seem from the testimony of defendant’s reporter in the New York office that the books are revised every six months, and that in the meantime, when application is made for special information, a ticket is given to him and he makes inquiries and reports. He testified that he did not receive any ticket or make any inquiries or report with respect to this firm between March and September, 1913. The plaintiff also attempted to show the financial condition of the firm at the time in question, and the information given by the firm to another agency shortly before, to show that the. firm was, in effect, insolvent at that time, but that evidence was all excluded. The defendant claims that it is relieved from liability by virtue of provisions of the contract as follows: “That the said company shall not be liable for any loss or injury caused by the neglect or other act of said company or any of its officers, agents or employees, in procuring, collecting, and communicating said information.” Both parties rely upon Xiques v. Bradstreet Co. (70 Hun, 334; affd. on opinion below, 141 N. Y. 605) in which it was stated, under a contract similar, excepting that it was confined to the acts of the employees and officers and did not embrace the acts of the agency itself, as does the contract in the case at bar, that these provisions relieved the agency from liability, except for gross negligence amounting to fraud. I am of opinion that the plaintiff presented a case for the consideration of the jury. The defendant neither made nor attempted to make any explanation concerning its false representations to the plaintiff. On the evidence adduced in behalf of the plaintiff the jury would have been justified in finding gross negligence on the part of the defendant, by which the plaintiff was misled to his loss in giving credit to an insolvent firm. The defendant has so drafted the contract that it is relieved from liability for any loss or injury caused by “neglect” or “other act” in “procuring, collecting, and communicating ” information to its subscribers. The contract must be given a construction which will entitle the plaintiff and other subscribers to receive something for the large annual payments [298] they are induced to make to defendant in expectation of receiving financial information with respect to those with whom they deal, which will be of some assistance to them in determining whether or not to extend credit. Of course, it was competent for the plaintiff to make a present of the money to defendant if that is what was intended, but manifestly it is not. Such contracts are rightly construed strictly against the party who prepares them. A reasonable construction, I think, merely relieves the defendant from errors and mistakes, but not from knowingly making false reports, or from gross mistakes or negligence by which reports, which are wholly false with respect to the action taken by the defendant on a request by a subscriber for a report as to the financial standing of a merchant, are made when it is known that he desires the information to enable him to determine whether to extend credit on a particular sale. The evidence would justify a finding of gross negligence, and also that defendant was guilty of constructive fraud in thus misrepresenting the financial credit of the firm to the plaintiff, thereby leading, if not inducing, him to extend the credit. It follows that the judgment should be reversed and a new trial granted, with costs to appellant to abide the event. Scott and Dowling, JJ., concurred; Ingraham, P. J., and Clarke, J., dissented.