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Show PAGE six MONDAY, DECEMBER 16, 1974 INTERMOUNTAIN COMMERCIAL RECORD ; I 1 In The Supreme Court of the State of Utah Shirman Milliner and George A. Burch, Plaintiffs and Appellants, v. No. 13520 FILED December 10, 1974 Elmer Fox and Co. , Don A. Stringham, Larry M. Follett, and Stringham 8r Follett, a professional corporation, or parties in preparing hi. report the accountant knew that a particular party of the opinion that would rely on the report for a particular purpose. We are . . in .L. m i.oV nf nrivit t. ftt Amfmnam where an accountant wno IB aware extend credit fact that his work will be relied on by a party or2 parties who may A future purchaser of shares to his client or assume his client's obligations. of stock of a corporation, however, belongs to an unlimited class of equity holders who could not be reasonably foreseen as a third party who would be accountant for the expected to rely on a financial statement prepared by an corporation. Defendants and Respondents. Allan E. Mecham, Clerk TUCKETT, Justice: Plaintiffs initiated these proceedings in the court below seeking to recover for the loss in value of certain shares of stock they had purchased from Commercial Liquidators, Inc. , a Utah corporation. Motions to dismiss were made by the defendants, and after a hearing was had the court ordered the complaint dismissed. The plaintiffs' complaint alleges that the defendant Elmer Fox and Co. were public accountants employed by Commercial Liquidators, Inc. , and that the defendants Don A. Stringham, Larry M. Follett, and Stringham 8r Follett, a professional corporation, were lawyers representing the same corporation. The complaint also alleges that the plaintiffs purchased shares of stock in. Commercial Liquidators, Inc. , and the purchasers relied on financial statements prepared by Elmer Fox Co. and documents prepared by the defendants Stringham fc Follett for filing with the Securities b Exchange Commission in making their decision to purchase the shares. That the market value of the shares of stock fell to such an extent that the shares have become valueless. The plaintiffs further allege that after they had purchased the securities they discovered that the financial statements and securities filings were false, and allege that the defendants were negligent in the preparation The relationship of attorney and client is a confidential relationship not akin to that of accountant and client. In the usual case an attorney acts As a upon the information furnished by his client, in carrying out his work. of general rule, an attorney is not required to investigate the truth or falsity facts and information furnished by his client, and his failure to do so would not be negligence on his part unless facts and circumstances of the particular legal problem would indicate otherwise or his employment would require his investigation. In their complaint the plaintiffs fail to allege acts or omissions on the part of the lawyer defendants which would tend to show negligence. Our attention has not been directed to any decision where liability of a lawyer has been sustained under similar circumstances. The plaintiffs claim that the defendant Elmer Fox and Co. is liable to the plaintiffs for damages under Section 1, U.C.A. 1953, by reason of the omissions and inaccuracies contained in the financial reports prepared by it. While that section makes certain practices unlawful, it does not provide for a private right of action for its violation. The plaintiffs urge this court to fashion a remedy, but we are of the opinion that it is a matter best left to the legislature. 61-1-- Defendants further claim that. the plaintiffs have failed to join an indispensable party. There is merit in that contention inasmuch as the plaintiffs purchased the stock from Commercial Liquidators, Inc. , as claimed by the allegations of the complaint. Plaintiffs should seek to recover back from the seller rather than from third parties unless the corporation has been dissolved or is under some disability. The plaintiffs have failed to allege any fact which would tend to show that the corporation is not an indispensable party. The plaintiffs make general allegations of fraud but they failed to comply with Rule 9(3)(b). U. R. C. P. of those documents. The order dismissing the complaint does not reveal grounds on which it was based. The motions of the parties urge in general their reasons for a dismissal. The reasons set forth are as follows: (1) there was no privity of contract between the defendants and the plaintiffs, and the plaintiffs' assertion of negligence on the part of the defendants failed to state a claim; (2) that Utah Code Annotated 1953. known as the Utah Uniform Securities Act, does not provide a private remedy for violation of its provisions; and (3) that Commercial Liquidators, Inc. . was an indispensable party which the plaintiffs failed to join. 61-1-- After a careful reading and consideration of the allegations set forth in the complaint, we are of the opinion that it fails to state a claim for which relief might be granted against these defendants. The decision of the court below is affirmed. Respondents are entitled to costs. 1, WE CONCUR: , An accountant may be held liable to his client for fraud or negligence in the preparation of financial statements as well as for breach of his contract of employment.' In suits by relying third parties the cases make a distinction between actions for negligence and for fraud. This problem is one of first E. R. Callister, Jr. impression with this court. The decisions from other jurisdictions differ widely in their treatment of the problem. Some, of those decisions enunciate the rule that an accountant is liable only to his client and that he is not liable to a stranger even though he knw that his reports would be relied upon by Other courts have taken the view that an accountant is liable for strangers. his negligence to a relying third party, despite the absence of privity, when 1. Ultramares Corp.-v- . Touche. 255 N.Y. 170, 174 N. E. 441, 74 A. L. R. 1139; State Street Trust Co. v. Ernst. 278 N. Y. 104. 15 N. E. 2d 416. 120 A. L. R. 1250; Restat. Torts, Sec. 552. Iris H. Stringham, Plaintiff and Respondent, No. 13696 FILED v. December 10, 1974 James Broderick, Defendant and Appellant. Allan E. Mecham, Clerk TUCKETT, Justice: Plaintiff commenced these proceedings in the District Court of Emery Cqunty, seeking to recover for injuries suffered and damages sustained by her as a result of an automobile collision. After a trial to a jury a verdict was returned in favor of the plaintiff and judgment upon the verdict was entered by the court. Defendant is here seeking a reversal. The evidence is not in substantial conflict as disclosed by the following statement of facts: On. the day of the accident the plaintiff was driving her automobile in an easterly direction on U. S. Highway 50-- 6 in Emery County, Utah. The highway was dry and the weather was clear except for strong winds in the vicinity. About five miles northwest of Green River, Utah, the plaintiff encountered a small dust storm which reduced visibility but which she quickly passed through. Plaintiff then immediately entered a second dust storm which was more severe and which reduced visibility to near zero. Plaintiff reduced her speed to approximately five miles per hour. The defendant was following the plaintiff's vehicle at some distance to the rear and he was not aware of its presence upon the highway. Prior to entering the second dust storm the defendant was proceeding at a speed of approximately 65 miles per hour but reduced his speed somewhat but did not apply the brakes. After the defendant had entered the dusty area a short distance he observed the rear lights of the plaintiff's vehicle ahead but he was unable to stop or to slow sufficiently to avoid a collision. The defendant's vehicle collided with the rear of plaintiff's car and propelled the plaintiff's automobile into a third vehicle ahead. The plaintiff's automobile burst into flames and she was rescued by the defendant. Plaintiff's husband was killed in the accident. At the trial the defendant requested the court to instruct the jury on unavoidable accidents, The language of the defendant's request is as follows: The law recognizes unavoidable accidents. An unavoidable accident is one which occurs in such a manner that it cannot justly be said to have been proximately caused by negligence as those terms are herein defined. In the event a party is damaged by an unavoidable accident, he has no right to recover, since the law requires that a person be injured by the fault or negligence of another as a prerequisite to any right to recover damages. The court declined to so instruct the jury, but the court fully instructed the I I , Chief Justice F. Henri Henriod, Justice Ellett, Justice and Crockett. Justice, concur in the result. T. Ryan v. Kanne (Iowa), 170 N. W. 2d 395; Rusch Factors, Inc. v. Levin, 284 F. Supp. 85; Shatterproof Glass Corp. v. James (Tex. Civ. App. ), 466 S. W. 2d 873, 46 A. L. R. 3d 968; the tentative drafts of the Restat. (Second) of Torts. Sec. 552. jury as to the issues of negligence, proximate cause and contributory negligence. It is only in a rare case that an instruction on unavoidable accident is applicable. If either party can avoid an accident by the exercise of proper care, it cannot be said to be unavoidable. The issue of unavoidable accident arises only where the evidence shows that the accident happened from an un- known or unforeseen cause or in an unexplainable manner which circumstances rebut the defendant's alleged negligence. In this case the defendant had a duty to anticipate that upon entering the second dust storm his vision would be reduced and perhaps obscured. The defendant did not attempt to further slow or to stop his vehicle until the intervening space between his vehicle and that of the plaintiff was insufficient to permit him to stop or to slow sufficiently. The rule of unavoidability does not apply when the negligence of a party puts him in such a position that a collision is inevitable. The facts in this case do not bring it within the orbit of unavoidability and it would have been error for the court to have given the instruction requested by the defendant. The defendant submits affidavits of five members of the jury which tended to show that the jury misconstrued or failed to understand the court's instructions. It is the rule in this jurisdiction that jurors may not impeach their verdict and a verdict may not be impeached by affidavits of jurors as to what was said or done in the jury room. Only that misconduct specified in Rule 59(a)(2) may be shown by affidavits of members of the jury. The record does not reveal any errors in the proceedings in the court below which would justify a reversal. Judgment of the court below is affirmed. Respondent is entitled to costs. WE CONCUR: E. R. Callister, Jr. , Chief Justice F. Henri Henriod, Justice J. Allan Crockett, Justice 1. Williams v. Globe Grain fr Milling Co. , 64 Utah 82. 228 P. 192; Wellman v. Noble, 12 Utah 2d 350, 366 P. 2d 701; Nissel v. Schacter. 192 N. Y.S. 2d 439; Vincent v. Johnson (Tex. Civil App. ), 117 S. W. 2d 135; Stovall v, Whatley (Tex. Civil App. ), 183 S. W. 2d 672; Blashfield Auto. Law gr Practice. 3rd Ed Sec. 101.13. ELLETT, Justice: (Concurring in the result) I concur in the result; however, for the reasons stated in my dissent in the case of Woodhouse v. Johnson I do not concur in the statement that an instruction on unavoidable accident is ever applicable. I. 20 Utah 2d 210, 436 P. 2d 442 (1968). |