208 So.2d 291 (Fla.App. 2 Dist. 1968), 67--95, Investment Corp. of Fla. v. Buchman
|Docket Nº:||67--95, 67--96.|
|Citation:||208 So.2d 291|
|Opinion Judge:||Author: Liles|
|Party Name:||INVESTMENT CORPORATION OF FLORIDA, a Florida corporation, Appellant, v. Ralph J. BUCHMAN, Leonard M. Anton and Robert A. McCormick, Appellees.|
|Attorney:||James E. Thompson of Fowler, White, Collins, Gillen, Humkey & Trenam, Tampa, for appellant.|
|Case Date:||February 28, 1968|
|Court:||Florida Court of Appeals, Second District|
Rehearing Denied April 10, 1968.
James E. Thompson of Fowler, White, Collins, Gillen, Humkey & Trenam, Tampa, for appellant.
Thomas C. MacDonald, Jr. and David G. Hanlon, of Shackleford, Farrior, Stallings & Evans, Tampa, for appellees.
LILES, Chief Judge.
The plaintiff-appellant, Investment Corporation of Florida, is appealing from final judgments entered pursuant to jury verdicts in favor of defendant-appellees.
The defendants, certified public accountants, had served as auditors for Belcher-Young Company and in that capacity defendants had prepared an uncertified financial statement depicting the condition of Belcher-Young as of September 30, 1963. The plaintiff desired to purchase an interest then brought suit against defendants asserting was made whereby plaintiff was to buy a large block of Belcher-Young stock. However, a proviso in the agreement called for Belcher-Young to provide a certified financial statement as of December 31, 1963. Furthermore, this proviso stated that if the certified statement disclosed that Belcher-Young's financial position as of December 31, 1963 had changed adversely in a material manner from its position as shown by the September 30, 1963 statement, then plaintiff could rescind the purchase.
The certified statements were subsequently prepared and forwarded to plaintiff, and plaintiff elected to stand by the transaction. In November of 1964, Belcher-Young failed financially and thereafter the shareholders of Belcher-Young received nothing for their stock. Plaintiff then brought suit against defendant asserting that it had relied upon defendants' certified statement in electing not to rescind the purchase of Belcher-Young's stock and further asserting that due to defendants' gross negligence in preparation of the statement, the financial condition of Belcher-Young was grossly misstated. In its complaint and amended complaint plaintiff sought to recover damages against defendants on several counts and alleged: that defendants were guilty of fraud; that Belcher-Young and defendants entered into a contract to prepare the certified statement and plaintiff was a third party beneficiary of that contract; that defendants knew plaintiff intended to rely on the certified statement and defendants owed a duty of due care to known third parties.
The plaintiff was allowed to go to the jury on the theory of fraud and third party beneficiary contract. Furthermore, the trial court instructed the jurors that if they found that defendants were grossly negligent in preparing the certified statement then the jurors could infer fraud on the part of the defendants. The jury found for defendants on both counts. On appeal,
plaintiff contends that the trial court erred in dismissing plaintiff's count which alleged that defendants violated their duty of care to plaintiff in that defendants were negligent 1 in the preparation of the financial statement when they knew plaintiff intended to act in reliance upon this statement.
The leading case involving the duty of certified public accountants to parties with whom they were not in privity of contract is Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441, 74 A.L.R. 1139 (1931). The defendants in Ultramares had no knowledge that the statements would be shown to plaintiff, however, the defendants did know 'that in the usual course of business the balance sheet when certified would be exhibited by the Stern Company to banks, creditors, stockholders, purchasers, or sellers, according to the needs of the occasion as the basis of financial dealings.' Ultramares...
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