Rassieur v. Charles

• Decision Date: 04 June 1945
• Docket Number: 39478
• Citation: 188 S.W.2d 817,354 Mo. 117
• Parties: Lillie Rassieur, Appellant, v. William Charles and Hubert Askew Stanley, Partners, Doing Business As Price, Waterhouse & Company, and O. E. Fischer
• Court: Missouri Supreme Court

188 S.W.2d 817

354 Mo. 117

Lillie Rassieur, Appellant, v. William Charles and Hubert Askew Stanley, Partners, Doing Business As Price, Waterhouse & Company, and O. E. Fischer

No. 39478

Supreme Court of Missouri

June 4, 1945

Rehearing Denied July 2, 1945.

Appeal from Circuit Court of City of St. Louis; Hon. Charles B Williams, Judge.

Reversed and remanded.

Rassieur Long & Yawitz for appellant.

(1) Plaintiff's second amended petition alleges facts constituting all of the necessary elements of a case in actionable negligence, and the trial court erred in sustaining defendants' demurrers to said petition. 45 C.J. 632; Roddy v. Mo. Pac. Ry. Co., 104 Mo. 234, 15 S.W. 1112, 12 L.R.A. 746; Davidson v. St. Louis-S.F. Ry. Co., 229 S.W. 786; Beckman v. Kinder, 165 S.W.2d 311; Bauer v. Wood, 236 Mo.App. 266, 154 S.W.2d 356. (2) A public accountant is under duty to use the due care and caution proper to his calling when employed to supply factual information, and is liable in damages to his employer who is injured as a result of relying and taking action upon negligent misrepresentations of fact made to him by the accountant. Facts sufficient to constitute a case in actionable negligence were pleaded in the second amended petition, and the trial court erred in sustaining defendants' demurrers to the petition. 3 Restatement of Law of Torts, sec. 552, p. 122; Renkert v. Title Guar. Trust Co., 102 Mo.App. 267, 76 S.W. 641; Smith v. London Assur. Corp., 96 N.Y.S. 820, 109 A.D. 882; National Surety Co. v. Lybrand, 9 N.Y.S. (2d) 554; Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441; Maryland Casualty Co. v. Cook, 35 F.Supp. 160; Dantzler Lbr. & Export Co. v. Columbia Casualty Co., 115 Fla. 541, 156 So. 116; Gilman v. Hovey, 26 Mo. 280; Schade v. Gehner, 133 Mo. 252, 34 S.W. 576; Glanzer v. Shepard, 233 N.Y. 236, 135 N.E. 275; Liability of Public Accountant, 8 A.L.R. 462n, 74 A.L.R. 1153n, 120 A.L.R. 1262n; Sources and Extent of Liability of Public Accountant -- Wm. R. McMillan, 15 Chicago -- Kent Rev. 1; Misrepresentation as Deceit, Negligence or Warranty -- F. H. Bohlen, 42 Harvard L. Rev. 733; Liability for Honest Misrepresentation -- Williston, 24 Harvard L. Rev. 415; Legal Liability of the Public Accountant -- C. P. Rouse, 23 Ky. L.J. 3. (3) A demurrer admits the truth of all facts properly pleaded and carries an admission of all inferences that may fairly and reasonably be drawn therefrom, and the trial court erred in disregarding the facts pleaded in plaintiff's second amended petition and in sustaining defendants' demurrers to that petition. Martin v. Ray County Coal Co., 288 Mo. 241, 232 S.W. 149; American Brewing Co. v. St. Louis, 187 Mo. 367, 86 S.W. 129; Heitzeberg v. Von Hoffmann Press, 100 S.W.2d 307, 340 Mo. 265; Rodgers v. Western Home Town Mut. Fire Ins. Co., 186 Mo. 248, 85 S.W. 369; Greenlake Inv. Co. v. Swarthout, 161 S.W.2d 697. (4) Neither the kind nor the measure of damages which plaintiff may be able to prove are to be considered in ruling on a general demurrer to a petition. If the petition shows that plaintiff has been injured and is entitled to damages of any kind, the demurrer should be overruled, and the trial court erred in sustaining defendants' demurrers to the second amended petition. Mitchell v. Health Culture Co., 162 S.W.2d 233, 349 Mo. 475; Barnett v. Ground, 263 S.W. 836, 304 Mo. 593; Crosby v. Farmers Bank of Andrew County, 107 Mo. 436, 17 S.W. 1004; King v. St. Louis, 250 Mo. 501, 157 S.W. 498; Weller v. Missouri Lbr. & Mining Co., 176 Mo.App. 243, 161 S.W. 853; Rourke v. Holmes Street Ry. Co., 177 S.W. 1102; Boston v. Alexander, 185 Mo.App. 16, 171 S.W. 582; Levine v. Hochman, 273 S.W. 204, 217 Mo.App. 76; Carthage Natl. Bank v. Poole, 160 Mo.App. 133, 141 S.W. 729; Greenlake Inv. Co. v. Swarthout, 161 S.W.2d 697.

Thompson, Mitchell, Thompson & Young, Guy A. Thompson, Samuel A. Mitchell and Richard D. Shewmaker for respondents.

(1) Allegations of facts from which actual and substantial damages may be inferred are essential in a case of this kind; nominal damages cannot be recovered. Beam Co. v. Bakewell, 224 Mo. 203, 123 S.W. 561; Bell v. Butte Inv. Co., 250 S.W. 381; Thompson v. Newell, 118 Mo.App. 405, 94 S.W. 557; Restatement of Law of Torts, sec. 552 and sec. 7, comment a; O'Neill v. Atlas Automobile Finance Corp., 139 Pa. S.Ct. 346, 11 A.2d 782; Roehl v. Ralph, 84 S.W.2d 405; Thurmond v. Ash Grove White Lime Assn., 125 Mo.App. 73, 102 S.W. 617. Cases Distinguished: King v. St. Louis, 250 Mo. 501, 157 S.W. 498; Greenlake Inv. Co. v. Swarthout, 161 S.W.2d 697; Weller v. Missouri Lbr. & Mining Co., 176 Mo.App. 243, 161 S.W. 853; Boston v. Alexander, 185 Mo.App. 16, 171 S.W. 582; Levine v. Hochman, 217 Mo.App. 76, 273 S.W. 204; Rourke v. Holmes Street Ry. Co., 177 S.W. 1102; Beckman v. Kinder, 165 S.W.2d 311; Smith v. London Assur. Corp., 109 A.D. 882, 96 N.Y.S. 820; National Surety Co. v. Lybrand, 256 A.D. 226, 9 N.Y.S. (2d) 554; Maryland Casualty Co. v. Cook, 35 F.Supp. 160; Dantzler Lbr. & Export Co. v. Columbia Cas. Co., 115 Fla. 541, 156 So. 116; Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441; Glanzer v. Shepard, 233 N.Y. 236, 135 N.E. 275; Renkert v. Title Guaranty Trust Co., 102 Mo.App. 267, 76 S.W. 641; Schade v. Gehner, 133 Mo. 252, 34 S.W. 576; Gilman v. Hovey, 26 Mo. 280. (2) The appellant was not damaged by the sale of her securities for their full value at the time of sale; their value on November 1, 1941, nearly a year after she sold them, is immaterial. Whitney v. Abbott, 191 Mass. 59, 77 N.E. 524; McDonough v. Williams, 77 Ark. 261, 92 S.W. 783; Harbaugh v. Ford Roofing Products Co., 281 S.W. 686; Great Eastern Oil Co. v. DeMert & Dougherty, Inc., 350 Mo. 535, 166 S.W.2d 490; 23 Am. Jur., sec. 178, p. 997; Anderson v. Snyder, 91 Conn. 404, 99 A. 1032; American Natl. Bank v. Hammond, 25 Colo. 367, 55 P. 1090; Ochs v. Woods, 221 N.Y. 335, 117 N.E. 305; Voellmeck v. Harding, 166 Wash. 93, 6 P.2d 373, 84 A.L.R. 608; Walker v. Borland, 21 Mo. 289; Brinkerhoff-Faris Trust & Savs. Co. v. Home Lbr. Co., 118 Mo. 447, 24 S.W. 129; Roll v. Fidelity Natl. Bank & Trust Co., 115 S.W.2d 148; Baker v. Drake, 53 N.Y. 211; Hall v. Paine, 224 Mass. 62, 112 N.E. 153, L.R.A. 1917C, 737. (3) The plaintiff's only allegation that is apparently designed to show damage, is the allegation that the securities had greatly increased in value on November 1, 1941, when the plaintiff first learned of the defendants' error. The plaintiff's situation at that time was in no way proximately caused by the defendants' act in inducing her to sell these securities nearly a year before. Title 26, U.S.C.A., sec. 118, Internal Revenue Code, sec. 118; Harrington v. Western Union Telegraph Co., 187 Mo.App. 580, 174 S.W. 169; Saxony Mills v. Huck, 208 S.W. 869; Craig v. Anyon, 212 A.D. 55, 208 N.Y.S. 259, affirmed without opinion 242 N.Y. 569, 152 N.E. 431; Springer v. Security Natl. Bank, Savs. & Trust Co., 175 S.W.2d 797; Niehaus v. Gillanders, 184 S.W. 949; Ward v. Ely-Walker Dry Goods Co., 248 Mo. 348, 154 S.W. 478.

OPINION

Hyde, P.J.

This is an action for $ 15,000.00 damages for alleged negligence of public accountants in preparing and auditing books and statements made in connection with plaintiff's income tax return. Demurrers were sustained to plaintiff's third petition and plaintiff has appealed from the judgment of dismissal entered.

The facts stated in the petition are summarized as follows:

(1) that defendants were public accountants engaged in the business of preparing and auditing books and records preparing financial statements, and preparing income tax returns; (2) that plaintiff hired defendants to prepare for her a set of books which would reflect clearly the cost or value of plaintiff's securities for the purpose of determining gains or losses under the income tax laws and regulations upon a sale or sales of such securities and to prepare her income tax return and compute the taxes owed by plaintiff for the year 1940; (3) that for a valuable consideration, defendants undertook this employment and in fact did set up such a set of books and did prepare her income tax returns for the year 1940; (4) that in November, 1940, defendants falsely represented to her that she had realized a taxable profit resulting from the sale of shares of North American Company stock, and then defendants undertook to advise her that under the income tax laws she had the right to sell other securities at a loss during 1940 for the purpose of off-setting such loss against the profit which defendants represented plaintiff had made on the sale of North American Company stock; (5) that defendants represented to plaintiff that making the sales of other securities at a loss would reduce her income tax liability for the year 1940 and that defendants advised plaintiff to make such sales; (6) that plaintiff relied on the representations made by defendants and the books and records prepared by them and did make sales of other securities which were selected by defendants with aid of plaintiff's broker; (7) that as a result of making the sales of other stocks, plaintiff received for such stocks an amount less than they had cost her and actually suffered a pecuniary loss; (8) that defendants, instead of correctly recording the proper cost to plaintiff of the North American stock, recorded the cost of such stock to her at a value which was less than its proper cost to her with the result that it appeared from the books and records prepared by defendants that plaintiff had realized a taxable gain on the sale of the North American Company stock when in fact she had sustained a capital loss on said sale; (9) that if defendants had used due care they could have ascertained the true cost to plaintiff of the North American Company...