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Keywords

plaintiffdefendantliabilitytrustgood faith

plaintiffdefendantjurisdictionliabilitygood faith

Related Cases

Vartan Garapedian, Inc., v. Anderson, 92 N.H. 390, 31 A.2d 371

Facts

Vartan Garapedian, Inc. sought to recover financial losses from Howard J. Anderson, who made negligent misrepresentations about George S. Dodge's reliability. Anderson, a general agent for a life insurance company, introduced Dodge to Garapedian, claiming Dodge was trustworthy. Despite Anderson's assurances, Dodge's reputation was poor, and he failed to pay for rugs sold to the Manchester Y.M.C.A. Garapedian relied on Anderson's statements, which were later found to be unverified and misleading.

The representations in question were made to Vartan Garapedian, the plaintiff's president and treasurer. They were made at Englewood, New Jersey, where the plaintiff was engaged in the manufacture and sale of rugs. The defendant, a resident of Manchester in this state, was the general agent of a well–known life insurance company.

Issue

Did Howard J. Anderson negligently misrepresent George S. Dodge's reliability, leading to financial loss for Vartan Garapedian, Inc.?

Rule

A defendant may be liable for negligent misrepresentation resulting in financial loss if the plaintiff reasonably relied on the defendant's statements, which the defendant failed to verify with due care.

In this jurisdiction the rule prevails that a defendant may be liable for a negligent misrepresentation which results merely in financial loss.

Analysis

The court determined that Anderson's statements about Dodge were made in good faith but lacked the necessary verification. Although Anderson believed his representations were true, he had a duty to ensure their accuracy, especially since Garapedian relied on his status and reputation. The court found that Garapedian, being a knowledgeable businessman, should have taken steps to verify the claims made by Anderson, which he failed to do.

The court ruled that the defendant, having volunteered information to the plaintiff, who did not have equal knowledge, with the intention that the plaintiff act upon it, and without exercising reasonable care to verify his statements before making them, was liable to the plaintiff, who reasonably relied upon those statements and acted upon them to his detriment.

Conclusion

The court ruled in favor of Howard J. Anderson, concluding that Vartan Garapedian, Inc. did not exercise reasonable diligence in verifying the truth of Anderson's statements regarding Dodge's reliability.

Judgment for the defendant.

Who won?

Howard J. Anderson prevailed in the case because the court found that Garapedian did not exercise due diligence in verifying the representations made by Anderson.

The presiding Justice found that the defendant on December 16, 1939, made statements similar to those contained in his letter of January 25, 1940, and that these statements were made 'in good faith and with an honest belief on his part that they were true.'

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