## Facts

- International Products Company, an importer, expected a valuable shipment to arrive in New York on the steamer *Plutarch* in August 1921.
- International arranged for Erie Railroad Company to receive the goods in Brooklyn, lighter them to Erie’s New Jersey docks, store them there, and later ship them onward on International’s instructions; no formal contract or bill of lading had yet been issued.
- International’s existing insurance covered the goods only until they reached the warehouse; International sought additional coverage while the goods were in storage with Erie and needed the specific dock location for the policy description.
- On August 17, International asked Erie where the goods would be stored, stating it needed the information to procure insurance.
- Erie responded that the goods were, or would be, at “Dock F, Weehawken,” and International reasonably inferred the goods were received and stored there.
- Relying on Erie’s statement, International obtained insurance specifying Dock F.
- The goods were actually stored at Dock D, where they were later destroyed by fire.
- The insurer denied coverage because the policy described Dock F rather than Dock D.
- International sued Erie to recover the amount it would have collected under insurance had Erie provided the correct dock location.

## Issues

1. Whether a carrier that provides location information in a business setting, knowing it will be relied on to obtain insurance, owes a duty to use reasonable care in giving that information.
2. Whether negligent misstatement under such circumstances can support recovery for purely economic loss (the lost insurance proceeds) without proof of intent to deceive or contractual privity.
3. Whether the misstatement proximately caused the plaintiff’s loss when the goods burned at a different, uninsured dock.

## Decision

- The New York Court of Appeals affirmed judgment for International.
- The court held Erie had a tort duty to speak carefully because it knew the information was requested for the specific purpose of obtaining insurance and would be relied upon.
- Erie’s negligent misstatement about the dock location was actionable even though the resulting harm was financial rather than physical.
- The court accepted causation: International obtained a policy naming Dock F because of Erie’s statement, the goods were stored and burned at Dock D, and the insurer denied payment due to the incorrect location description.
- Damages were properly measured by the amount International would have recovered under an accurately written insurance policy.

## Legal Principles

- A party that, in the course of business, supplies information for another’s serious transaction, and knows the recipient will rely on it, must exercise reasonable care in providing the information.
- Negligent misrepresentation may be actionable without fraudulent intent when reliance is specifically invited or known and the resulting economic loss is a foreseeable consequence.
- Liability may arise in tort independent of a completed contract, where the duty stems from the circumstances of the communication and the known purpose of the information.
- Proximate cause is satisfied when the negligent statement foreseeably induces a specific insurance description that directly results in loss of coverage for the event that occurs.

## Conclusion

The court imposed tort liability for negligent misrepresentation where a carrier, asked for a dock location to secure insurance, carelessly provided incorrect information that foreseeably caused the shipper to obtain ineffective coverage and suffer the resulting uninsured loss.


International Prods. Co. v. Erie R.R. Co., 244 N.Y. 331, 155 N.E. 662 (N.Y. 1927)