Thrifty-Tel, Inc. v. Bezenek |
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[NOTE: This case has been edited for classroom use by the omission of text, citations, and footnotes. See supra at Chapter 06 for discussion of the facts and the trespass to chattles claim by the same court. See this alternate source for the full opinion.] Crosby, Acting P.J. . . . . IIIPlaintiff's cyber-fraud cause of action also applies a hoary common law theory to computer-age facts. The Bezeneks maintain they cannot be liable for fraud because the computer machinations did not constitute a misrepresentation and there was no evidence of reliance by Thrifty-Tel. Au contraire, asserts plaintiff: . . . [their children's] use of the confidential access code was the legal equivalent of a misrepresentation that they were authorized users of its services, and plaintiff relied to its detriment on that misrepresentation when its computer automatically granted them access to the network. Plaintiff's point is well taken. A misrepresentation need not be oral; it may be implied by conduct. We are aware of no decision holding the unauthorized use of a telephone access code constitutes misrepresentation. But decisions in analogous circumstances support that conclusion. For example, in State v. Hamm, 569 S.W.2d 289 (Mo.App. 1978), the defendant used the bank card and personal identification number (PIN) of another person to steal cash at an automatic teller machine. Rejecting the assertion he made no misrepresentation, the court noted defendant's use of the card and confidential PIN was an was an implied misrepresentation as to his identity. 569 S.W.2d at 290-291. The same logic applies here. But misrepresentation is only one element of a fraud cause of action; the plaintiff must also have relied on the misrepresentation to its detriment. True, no human at Thrifty-Tel received and acted on the misrepresentation. But California courts recognize indirect reliance. Moreover, the notion that reliance by an agent may be imputed to the principal, even though the misrepresentation was never communicated to the principal, is ensconced in California law. We view Thrifty-Tel's computerized network as an agent or legal equivalent. In this regard, State v. Hamm, is again persuasive. There, the defendant argued a bank did not detrimentally rely on his misrepresentation to an automatic teller machine via the unauthorized use of someone else's bank card and PIN. Rejecting this contention, the court noted, The machine was so programmed that no money would be paid out without the insertion of the appropriate card and the corresponding personal identification numbers. When those items were supplied, the response was programmed so as to pay out the money. No difference can be perceived whether the bank gave approval after the presentation of those identification items or whether it programmed its acceptance upon those conditions in advance. In either case, the bank equally relied upon the presentation of the card and personal identification.569 S.W.2d at 291. Here, Thrifty-Tel depended on the access code to identify the boys as authorized users of the system. That reliance was detrimental because their access, in effect, permitted them to steal plaintiff's services. . . . . |
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