Giant Food, Inc. v. Ice King, Inc.

GILBERT, Chief Judge. “Words,” Justice Frankfurter said, “are clumsy tools, and it is very easy to cut one’s fingers with them.” 1 The question we must answer in this appeal is whether the appellants cut their fingers on their own words. A jury in the Circuit Court for Howard County (Fischer, J.) decided that Giant Food, Inc., and two of its employees, George Knippen and William Hendricks, had, by their words and actions, negligently misrepresented certain facts to Ice King, Inc., and Richard Epple. The jury returned a verdict in favor of Ice King in the amount of $182,265.00 and $1.00 for Epple. Believing themselves wronged by that decision, Giant, Knippen, and Hendricks have appealed to this Court, where they posit the single issue: “Whether certain statements made by the individual Appellants ... to ...

Epple were sufficient for [the purpose] of imposing liability on the part of Appellants for the tort of negligent misrepresentation.” The brunt of appellants’ attack on the judgment of the circuit court is bivalved: First, they assert that no duty was owed to the appellees, under the facts of the case and, ¹⁸⁶ second, that even if a duty was owed the appellees “were not justified in relying upon the appellants’ statements.” We shall discuss each of those facets of appellants’ argument in the order in which they are posed, supplying any additional facts necessary to a better understanding of the issue under consideration. In so doing, we shall focus on the evidence adduced by the appellees, in the light most favorable to them, as we must when testing the sufficiency of the evidence. See Impala Platinum Limited v. Impala Sales (U.S.A.), Inc., 283 Md. 296 , 389 A.2d 887 (1978). Duty Appellants contend that there was insufficient evidence for the jury to have found a duty of care on the part of Giant.

They assert that there were “no words spoken or correspondence written between the parties creating, acknowledging or accepting a duty, or otherwise confirming the existence of a duty passing from Appellants to Appellees.” The crux of appellants’ argument is that there was no oral or written contract adduced at trial, no “special relationship” was shown to have existed, and there were no dealings between the parties that created a duty on appellants’ part to speak truthfully. “The action for negligent misrepresentation was created to provide a tort remedy for the plaintiff who had acted in reliance upon the false[ 2 ] statement of a defendant whose conduct in uttering the statement was culpably careless, but not deliberately fraudulent, and who was aware that the plaintiff would reasonably act in reliance upon the statement.” Note, Deceit and Negligent Misrepresentation in Maryland, 35 Md.L.Rev. 651, 673 (1976). ¹⁸⁷ The signal case in Maryland on negligent misrepresentation is Virginia Dare Stores, Inc. v. Schuman, 175 Md. 287 , 1 A.2d 897 (1938). Note, supra, 35 Md.L.Rev. at 662. Although Virginia Dare involved personal injury occasioned by negligent misrepresentation, the cause of action has been sustained where the “injury” was limited to pecuniary loss. See Leonard v. Sav-A-Stop Servs., Inc., 289 Md. 204 , 424 A.2d 336 (1981); St. Paul at Chase Corp. v. The Manufacturers Life Ins.

Co., 262 Md. 192 , 278 A.2d 12 (1971); Brack v. Evans, 230 Md. 548 , 187 A.2d 880 (1963). See generally Note, supra, 35 Md.L.Rev. at 663-64. Despite the absence of any contractual privity between the parties, the Court in Virginia Dare allowed a plaintiff to recover in negligence for the personal injury he suffered as a result of relying upon the defendant’s misrepresentations. The Court observed: “[T]he weight of authority ... seems to be that such action is not necessarily confined to injuries arising out of contractual relations; that the action lies for negligent words, recovery being permitted when one relies on statements of another, negligently volunteering an erroneous opinion intending that it be acted upon and knowing that loss or injury are likely to follow if it is acted upon.” 175 Md. at 291-92 , 1 A.2d 897 .

In formulating its holding, the Virginia Dare Court relied upon Cunningham v. C.R. Pease Co., 74 N.H. 435 , 69 A. 120 (1908), and International Products Co. v. Erie Railroad Co., 244 N.Y. 331 , 155 N.E. 662 (1927). Each of those cases permitted recovery for false statements in a cause of action grounded in negligence. Martens Chevrolet v. Seney, 292 Md. 328, 335, n. 5 ., 439 A.2d 534 (1982). See also Note, supra, 35 Md.L.Rev. at 661.

With respect to the relationship between the parties in cases of negligent misrepresentation, the Court of Appeals seems to have adopted the case law of New York. See Note, supra, 35 Md.L.Rev. at 667. To illustrate, the Court in Holt v. Kolker, 189 Md. 636 , 57 A.2d 287 (1948), cited ¹⁸⁸ with approval Glanzer v. Shepard, 233 N.Y. 236 , 135 N.E. 275 (1922). There, speaking for a majority of the New York Court of Appeals, Judge Cardozo said that a public weigher, hired by a seller to weigh beans, was liable in tort to a buyer for the weigher’s negligent misrepresentation of the weight in a certificate he issued at the vendor’s request.

This was so, the Court declared, even though there was no privity of contract between the parties and the certificate was not made at the buyer’s request. The plaintiff-buyer was allowed to recover because the defendant-weigher knew the plaintiff would act in reliance upon the false weight certificate. See Note, supra, 35 Md.L.Rev. at 667. Judge Cardozo reasoned that the “assumption of the task of weighing was the assumption of a duty to weigh carefully for the benefit of all those whose conduct was to be governed” by the weighing.

Glanzer, 233 N.Y. at 239 , 135 N.E. 275 . Damages were allowed because “the bounds of duty are enlarged by knowledge of prospective use.” Id. at 240 , 135 N.E. 275 . Glanzer stands for the proposition that a defendant’s knowledge of the plaintiff’s reliance on the statements made created a duty of care on the part of the utterer of the statements. The International Products case cited by the Maryland Court of Appeals to buttress its Virginia Dare ruling followed Glanzer in allowing a plaintiff-owner of goods to recover, in negligence, for a warehouseman’s false statements as to the location of the plaintiff's goods, thereby causing the goods to be uninsured when destroyed by fire.

The evidence showed that the goods were not received by the defendant until after he had made the misstatements. Nevertheless, the court allowed the prospective carrier to recover for the negligent misrepresentation by the prospective bailor. Although no definite contract had been executed between the parties, any duty that might arise out of the “arrangement” was alleged by the defendant not to be owed by him until his receipt of the goods. The Court, in rejecting that assertion, stated: ¹⁸⁹ “An inquiry made of a stranger is one thing; of a person with whom the inquirer has entered, or is about to enter, into a contract concerning the goods which are, or are to be, its subject, is another____ But in a proper case we hold that words negligently spoken may justify the recovery of the proximate damages caused by faith in their accuracy.” 244 N.Y. at 338 , 155 N.E. 662 .

To be certain that Glanzer was not interpreted as a panacea for all misstatements of fact, the International Products Court delineated Glanzer ’s bounds, stating: “Not every casual response, not every idle word, however damaging the result, gives rise to a cause of action____ Liability in such cases arises only where there is a duty, if one speaks at all, to give the correct information. And that involves many considerations. There must be knowledge, or its equivalent, that the information is desired for a serious purpose; that he to whom it is given intends to rely and act upon it; that, if false or erroneous, he will because of it be injured in person or property. Finally, the relationship of the parties, arising out of contract or otherwise, must he such that in morals and good conscience the one has the right to rely upon the other for information, and the other giving the information owes a duty to give it with care.” 244 N.Y. at 337-38 , 155 N.E. 662 (emphasis supplied).

Patently, the duty to furnish the correct information arises when the relationship is of the nature that one party has the right to rely upon the other for information. The precise degree of the relationship that must exist before recovery will be allowed is a question that defies generalization. International Products, 244 N.Y. at 338 , 155 N.E. 662 , put it best when it declared: “[E]ach case must be decided on the peculiar facts presented. The same thing is true, however, in the usual action for personal injuries.

There whether negligence exists depends upon the relations of the parties, the thing ¹⁹⁰ done or neglected, its natural consequences, and many-other considerations. No hard and fast line may be drawn.” According to Prosser and Keeton on the Law of Torts, § 107 (5th Ed.1984), 1988 Supp. at 105, the most common example of the duty to speak with reasonable