Connection lost
Server error
Citizens State Bank v. Timm, Schmidt & Co. Case Brief
Why Top Law Students (And Those Aspiring to Be) Use LSD+ Briefs
Let's be real, law school is a marathon. Our exclusive Flash-to-Full case system is designed by Harvard Law School and MIT grads to match your pace: Quick summaries when you're slammed, detailed analysis when you need to go deep. Only LSD+ offers this kind of flexibility to genuinely fit your study flow.
Adaptive Case Views
Toggle between Flash, Standard, and Expanded. Get what you need, when you need it.
Exam-Ready IRAC Format
We deliver the precise structure professors look for in exam answers.
Complex Cases, Clarified
We break down dense legal reasoning into something digestible, helping you grasp core concepts.
Case Brief Summary & Legal Analysis
tl;dr: An accounting firm negligently prepared financial statements. A bank relied on them to make a loan and lost money when the company failed. The court rejected the privity rule, holding accountants can be liable to any foreseeable third party who relies on their work.
Legal Significance: The case rejects both the traditional privity rule (Ultramares) and the Restatement § 552 approach for accountant liability, instead adopting a broad foreseeability standard from general negligence law, limited only by public policy considerations to be determined after trial.
Citizens State Bank v. Timm, Schmidt & Co. Law School Study Guide
Use this case brief structure for your own legal analysis. Focus on the IRAC methodology to excel in law school exams and cold calls.
Case Facts & Court Holding
Key Facts & Case Background
Defendant Timm, Schmidt & Co., an accounting firm, prepared audited financial statements for Clintonville Fire Apparatus, Inc. (CFA) for the years 1973-1976. The financial statements for 1974 and 1975 contained material errors that overstated the company’s value by over $400,000. Plaintiff Citizens State Bank, which was not in privity with Timm, reviewed and relied upon these negligently prepared statements when it extended approximately $380,000 in loans to CFA. The defendant’s president acknowledged knowing that audited statements are commonly supplied to lenders, but the firm’s employees denied specific knowledge that CFA would use these particular reports to obtain loans from Citizens. In 1977, Timm discovered the errors and informed Citizens. Citizens subsequently called its loans, which forced CFA into receivership and liquidation. Citizens was unable to recover over $152,000 of its loans and sued Timm for negligence. The trial court granted summary judgment for Timm, finding no duty of care was owed to a third party not in privity.
Court Holding & Legal Precedent
Issue: May an accountant be held liable for negligence to a third party not in privity who foreseeably relies on a negligently prepared audit report?
Yes. An accountant may be held liable to a third party not Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore
IRAC Legal Analysis
Complete IRAC Analysis for Higher Grades
IRAC (Issue, Rule, Analysis, Conclusion) is the exact format professors want to see in your exam answers. Our exclusive Flash-to-Full briefs combine holding, analysis, and rule statements formatted to match what A+ students produce in exams. These structured briefs help reinforce the essential legal reasoning patterns expected in law school.
Legal Issue
May an accountant be held liable for negligence to a third party not in privity who foreseeably relies on a negligently prepared audit report?
Conclusion
This decision significantly expands professional liability in Wisconsin by replacing the privity Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex
Legal Rule
An accountant's liability to a third party for negligent misrepresentation is determined Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute iru
Legal Analysis
The Wisconsin Supreme Court departed from the traditional common law rule established Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostr
Flash-to-Full Case Opinions
Flash Summary
- An accountant may be held liable for negligence to a third