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Torts Keyed to Henderson
Ultramares Corporation v. Touche
Citation:
255 N.Y. 170, 174 N.E. 441 (1931)Facts
In January 1924, Touche, Niven & Co. was employed by Fred Stern & Co. to prepare and certify a balance sheet showing the company’s financial condition as of December 31, 1923. The defendants knew that the balance sheet would be shown to banks, creditors, and potential investors to obtain credit. They provided Stern with 32 certified copies of the balance sheet, which showed assets of $2,550,671.88 and liabilities of $1,479,956.62, indicating a net worth of $1,070,715.26. In reality, the company was insolvent, with its books falsified to show fictitious accounts receivable. In March 1924, Ultramares Corporation, which had previously only done minor cash business with Stern, was approached for loans. Ultramares demanded a certified balance sheet before extending credit and was given one of the certificates prepared by the defendants. Based on this certification, Ultramares made a series of loans to Stern over the following months. In December 1924, Stern’s company collapsed, and it was declared bankrupt on January 2, 1925, leaving Ultramares with substantial losses.
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