Hicks, the president and manager of Intermountain Merchandising, wanted to sell the business to Montana Merchandising, Inc. To provide a basis for the transaction, he retained Bloomgren, an accountant, to conduct an audit of Intermountain. Bloomgren knew that Montana would use the audit report in making the purchase of the business from Intermountain.
Bloomgren’s audit report showed the Intermountain business as profitable. Thayer, Montana’s president, relied on this report in agreeing to purchase the business of Intermountain and in agreeing to the terms of the purchase. Sometime later, it was discovered that the accountant had made a number of mistakes and that the business that was sold was actually insolvent. Thayer and Montana Merchandising sued Hicks and Bloomgren for damages. The suit claimed that the accountant had negligently misrepresented the facts. The accountant defended on the basis that Thayer was not in privity of contract with him and therefore could not sue him. Was he right? [Thayer v. Hicks, 793 P.2d 784 (Mont.)]