No. 14891 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1980 

EDWARD J. GALLAGHER, 

Plaintiff and Appellant, 

VS. 

CHARLES G. JOHNSON, 

Defendant and Respondent. 

Appeal from: District Court of the Third Judicial District, 

Honorable Gordon R. Bennett, Judge presiding. 

Counsel of Record: 

For Appellant: 

Knight, Dahood, Mackay & McLean, Anaconda, Montana 

Wade Dahood argued, Anaconda, Montana 

For Respondent: 

Gough, Shanahan, Johnson & Waterman, Helena, Montana 

Ronald Waterman argued, Helena, Montana 

Michael J McKeon, Anaconda, Montana 

Submitted: February 27, 1980 

Decided: @$+ 2 1 1384 

',h + - , 5.4Q Filed: .! 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

The plaintiff-appellant, a public officer, filed a 

complaint in libel on June 2, 1978, in the District Court of 

the Third Judicial District, in and for the County of Deer 

Lodge. A motion to dismiss was filed by respondent on June 

16, 1978. After submission of briefs on the motion the 

District Court denied the motion to dismiss and ordered appellant to file an amended complaint. Appellant filed his 

amended complaint oil December 19, 1978. A motion to dismiss 

the amended complaint was filed by respondent on January 2, 

1979. The matter was briefed, argued and the court granted 

respondent's motion to dismiss. 

The decision of the District Court rested on legal 

questions only and at the pleading stage few facts were 

developed. Some background information is found in the 

record. 

Appellant is a resident and native of Anaconda, Montana. Since 1970 he has been the Director of the Urban 

Development Agency for the City of Anaconda, agreed to be a 

public office. 

Until his death, respondent also resided in Anaconda 

and was a self-employed businessman. Respondent was apparently well known for his outspoken views and criticism of 

the management of civic affairs in the City of Anaconda and 

Deer Lodge County. One way he expressed those views was to 

buy advertising space in the local newspapers where he would 

set forth his positions on a wide range of subjects. 

The difficulties leading to this case arose when respondent began questioning actions of the Urban Renewal Development Agency personally and in his advertisements. 
Appellant alleged in his amended complaint that he was 

a public officer and that respondent had made statements 

which were false, defamatory and circulated with the intent 

to affect the good name, reputation and occupation of appellant. He identified nine separate instances where statements were made which he considered to be libelous. 

In its order dismissing the cause the District Court 

found that a number of the alleged libelous paragraphs were 

too vague to constitute libel per se and that there was some 

question whether the words set forth constituted libel by 

inference (per quod). The conclusion reached by the District Court was that each statement, construed in the light 

most favorable to appellant, constituted libel per quod, if 

the statements were libelous at all. Since no specific 

damages were alleged in the complaint, the District Court 

concluded no cause of action had been stated and the complaint was dismissed. 

Appellant brings this appeal from the judgment of 

dismissal. 

The issues presented for review by this Court concern 

whether the District Court erred in granting the motion for 

dismissal and, more specifically: 

1. Whether a public official seeking to recover for 

alleged libelous or slanderous statements must plead special 

damages specifically beyond good name, reputation, and occupation, etc., if the statements are libel per quod and not 

susceptible of dollar and cents proof. 

2. Whether actual malice must be specifically pleaded 

to satisfy the requirements of the First Amendment of the 

United States Constitution. 
Appellant' s contentions are : 

1. Respondent's publications have been injurious to 

the person and occupation of the appellant and the complaint 

in its entirety sets out a sufficient claim of injury by 

defamation to warrant a jury trial to determine what remedy 

is appropriate. 

2. Statements by the respondent set forth in paragraph 

IV (1) and (2) of the amended complaint constitute slander 

within section 27-1-803, MCA, and reference to Montana case 

law shows that this slander, if written, would constitute 

libel per se. Manley v. Harer (1925), 73 Mont. 253, 235 P. 

757; Burr v. Winnett Times Pub. Co. (1927), 80 Mont. 70, 258 

P. 242. 

3. Paragraph V of appellant's amended complaint, 

alleging that respondent intended by his statement and 

publications to have the people of Deer Lodge County believe 

that appellant was dishonest, acted illegally and had been 

violating the law, was sufficient in this era of notice 

pleading to plead special damage by way of injury to appellant's occupation. As a public official whose effectiveness 

relies solely upon the public's confidence in his actions 

and intentions, appellant's damage cannot be measured in 

terms of lost contracts or personal business opportunities. 

Appellant, therefore, sufficiently pleaded special damages 

resulting from injury to him in his occupation to allow this 

cause to go before a jury. 

4. Appellant in part V of his amended complaint alleged that respondent "knew that said words were untrue and 

in preparing, composing, and causing to be circulated said 

defamatory words . . . acted with specific malice . . ." 

The clear weight of authority has been found to show that 
this allegation is sufficient to state the actual malice 

standard required by New York Times Co. v. Sullivan (1964), 

376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686. 

5. The pleadings set forth by appellant in his amended 

complaint not only conform to the standards set in New 

-- 

York 

Times but also fulfill the requirements of Rule 9(b) M.R.Civ.P. 

Respondent relies mainly on the argument that in Montana 

specific damages must be pleaded and proven to support a 

claim for libel per quod. Special damages must not only be 

suggested in the complaint but the facts constituting special damages "must be alleged or no cause of action is 

stated." Lernrner v. The "Tribune" (1915), 50 Mont. 559, 148 

P. 338. Second, respondent contends the failure to allege 

the facts which constituted actual malice also warranted 

dismissal of the action. Regarding public officials, the 

First Amendment requires that before recovery for libel, the 

plaintiff must plead and prove the publication was false and 

was made with actual malice. New -- York Times, 376 U.S. at 

279-80, 84 S.Ct. at 726, 11 L.Ed.2d at 706. 

In Montana libel is defined as: 

". . . a false and unprivileged publication by 

writing, printing, picture, effigy, or other 

fixed representation to the eye which exposes 

any person to hatred, contempt, ridicule, or 

obloguy or which causes him to be shunned or 

avoided or which has a tendency to injure him 

in his occupation." Section 27-1-802, MCA. 

Slander is defined as: 

". . .a false and unprivileged publication other 

than libel which: 

"(1) charges any person with crime or with having 

been indicted, convicted, or punished for crime; 

"(2) imputes in him the present existence of an 

infectious, contagious, or loathsome disease; 
"(3) tends directly to injure him in respect to his 

office, profession, trade, or business, either by 

imputing to him general disqualification in those 

respects which the office or other occupation peculiarly requires or by imputing something with reference to his office, profession, trade or business 

that has a natural tendency to lessen its profit; 

"(4) imputes to him impotence or want of chastity; 

or 

"(5) by natural consequence causes actual damage." 

Section 27-1-803, MCA. 

The District Court in its memorandum presented a condensation of the case law on libel and slander in Montana which 

it used as a standard for judgment of this complaint, stating: 

"For some reason, enshrouded by the mists of time 

and accretions of common law and the Field Code, 

a formal distinction is made in our code between 

libel and slander. (MCA 27-1-802 and 803.) Both 

are false and unprivileged publications which cause 

injury by defamation (including, specifically, the 

imputation of impotency in the case of slander). 

Beyond that, they are superficially different, but 

the differences are insignificant here. . . . 'Words 

are defamatory per se which upon their face and 

without the aid of extrinsic proof are injurious to 

the person concerning whom they are spoken.' Manley 

v. Harer, 73 M 258. They must be susceptible of 

but one meaning (Brown v. Independent Publishing Co., 

48 M 380), and that an opprobrious one. (Burr v. 

Winnett Times, 80 M 75). If the words are not defamatory -- per se they cannot be made so by innuendo. . . . To determine whether the words constitute libel 

per se they must be construed in relation to the 

entire publication, which must in turn be viewed as 

a stranger might look at it, without the knowledge 

possessed by the parties concerned (Brown, supra, pg. 

380). Their injurious character must be a fact of 

such common notoriety as to be established by the 

general consent of men so that the court takes 

judicial notice (Griffin v. Opinion Publishing Co., 

114 M 508). In a word, the insult must be obvious. 

"Generally, if the words are defamatory per 

se, damage is presumed and general damages 

may be recovered without allegation or proof 

of special damages (Paxton v. Wocdward, 31 M 

209). See discussion of exception that must 

be made in the case of alleged libel of public 

official, below. If the words are - not defamatory 

per -- se facts must be pleaded which show the words 

are libelous and special damages must be specially 

pleaded, according to all the Montana cases from 
Ledlie v. Wallen (1895) 17 M 155 to Steffes v. 

Crawford (1963) 143 M 47. A complaint based on 

-- per quod defamation fails to state a cause of L action if special damages are not alleged (Griffin, 

supra, 508). Facts must be pleaded which show the 

character and extent of the injury (Manley v. 

Harer, 73 M 259). It is not enough, according to 

the Montana cases, to aver generally that in consequence of the publication the plaintiff has been 

damaged in his business. The facts showing such 

damages must be alleged or no cause of action is 

stated (Lemmer v. The "Tribune", 50 M 565). While 

there are no reported Montana cases on the subject, 

there seems to be no reason why this state would 

not follow the several states, apparently the unquestioned maioritv. which find insufficient a 

complaint based on per quod defamation resulting 

1

state special pecuniary loss for which recovery is 

sought. These states require allegations as to 

particular contracts, sales, employments, etc., 

lost bv reason of the defamation. See 53 CJS 272. 

Libel Slander, Section 170 (d) and 50 Am Jur 2d' 

945, Libel & Slander, Section 420. I gather from 

a check on some of the cases cited under these 

sections that relaxation of specificity requirements under modern pleading practice has not discernably altered this requirement. As noted, I 

would apply all of the above principles without 

discriminating between libel and slander pleadings." (Emphasis added.) 

With the above ground rules in mind, the District Court 

engaged in a paragraph-by-paragraph discussion of the amended 

complaint and concluded that "all of the statements set 

forth in the separate paragraphs of allegation #IV, together 

with their associated allegations, constitute libel per - 

quod, if they are libelous -- at all, and must ---- fail for lack 

- of allegation - of specific damages." (Emphasis supplied.) 

The District Court further concluded that even if all 

the statements were clearly libel per se, the complaint 

would fall short of stating a cause of action because no 

specific facts were alleged to support the malice allegation. 

For some reason, which is also enshrouded by the mists 

of very recent time, none of the parties presented for consideration to the District Court the most recent case on 
this subject, Madison v. Yunker (1978), Mont. 589 

P.2d 126, 35 St.Rep. 1311, where this Court stated: 

"Finally, in Gertz v. Robert Welch, Inc., supra, 

the Supreme Court, while allowing states to provide for libel suits, erected a fence around the 

amount of damages recoverable: 

"'We would not, of course, invalidate state law 

simply because we doubt its wisdom, but here we 

are attempting to reconcile state law with a 

competing interest grounded in the constitutional 

command of the First Amendment. It is therefore 

appropriate to require that state remedies for 

defamatory falsehood reach no farther than is 

necessary to protect the legitimate interest 

involved. It is necessary to restrict defamation 

plaintiffs who do not prove knowledge of falsity 

or reckless disregard for the truth to compensation for actual injury. We need not define "actual injury," as trial courts have wide experience in framing appropriate jury instructions in 

tort actions. Suffice it to say that actual injury is not limited to out-of-pocket loss. Indeed, 

the more customary types of actual harm inflicted 

by defamatory falsehood include impairment of 

reputation and standing in the community, personal humiliation, and mental anguish and suffering. Of course, juries must be limited by appropriate instructions, and all awards must be 

supported by competent evidence concernins the 

injury, although there --- need be no evidence which 

assigns - an actual dollar value to -- the injury. 

"'We also find no justification for allowing 

awards of punitive damages against publishers 

and broadcasters held liable under state-defined 

standards of liability for defamation. In most 

jurisdictions jury discretion over the amounts 

awarded is limited only by the gentle rule that 

they not be excessive. Consequently, juries 

assess punitive damages in wholly unpredictable 

amo~~nts bearing no necessary relation to the 

actual harm caused. And they remain free to 

use their discretion selectively to punish expressions of unpopular views. Like the doctrine 

of presumed damages, jury discretion to award 

punitive damages unnecessarily exacerbates the 

danger of media self-censorship, but, unlike the 

former rule, punitive damages are wholly irrelevant to the state interest that justifies a 

negligence standard for private defamation actions. They are not compensation for injury. 

Instead, they are private fines levied by civil 

juries to punish reprehensible conduct and to 

deter its future occurrence. In short, the private defamation plaintiff who establishes liability under a less demanding standard than 

that stated by New --- York Times may recover only 

such damages as are sufficient to compensate him 

for actual injury.' 418 U.S. at 349, 350, 94 

S.Ct. at 3012. 
"In this case, defendants have constantly referred to Madison as a 'public officialt, apparently to bring this case under the umbrella 

of New York Times Co. v. Sullivan, supra. We 

are skeptical that the director of the print 

shop at the University of Montana, Missoula, 

Montana, is indeed a 'public official'. In 

Gertz v. Robert Welch, Inc., supra, it was held 

that a lawyer was not a public official, although 

he had taken on a prominent case and was by vir- 

"ue of his profession an officer of the court. 

Likewise, it may be contended in the retrial that 

Madison is a 'public figure'. Whatever his 

status, it is a guestion for the jury to deter- --- -- 

mine, because -- of the constitutional provision 

that -- - the ----- under the instructions of the court 

-- is the judge ----- of both law and fact. Article 11, 

Section 7, 1972 Montana Constitution. With -- zpropriat6 instructions, the jury can determine 

these matters and their status in any trial, - unless otherwise stipulated. 

"In this case, therefore, applying the rationale 

of the cases of the United States Supreme Court 

on damages for libel, if Madison is considered 

to be a private person, he must prove: (1) that 

the published material was false; (2) that defendants are chargeable with fault in the publication; and (3) that actual injury to him ensued, 

for which he may recover his actual damages. 

Moreover, (4) if he proves that the publication 

was made by defendants with knowledge of its 

falsity or in reckless disregard for the truth 

or falsities thereof, he may recover punitive 

damages for such malice, but such malice does 

not include hatred, personal spite, ill-will or 

a desire to injure. New York Times Co. v. Sullivan, supra; Letter Carriers v. Austin (1974), 

418 U.S. 264, 94 S.Ct. 2770, 41 L.Ed.2d 745. 

"If Madison is a public official or public 

figure, he may recover only -- if he proves the 

threshhold --- fact that the publication was -- made 

with knowledge -- of its falsity or reckless disregard -- for its truth or falsity. He could then 

recover his actual andpunitive damages." (Emphasis added.) 589 P.2d at 132-33. 

Madison has adequately stated Montana's position on the 

two legal problems presented here. We have adopted the 

position of New York Times v. Sullivan, supra. 

Since New -- York Times was decided by the United States 

Supreme Court in 1964, a defendant in a libel action has 

been accorded an additional First Amendmerlt protection in 

the making of defamatory statements concerning public offi- 
cials. Unless he made them with "malice," that is to say 

that unless he knows the statements to be false, or makes 

them with reckless disregard for the truth, or in fact 

entertained serious doubts about their truth, or had a high 

degree of awareness of their probable falsity, he will not 

be held liable in a libel action. Such malice does not 

include hatred, personal spite, ill will, or desire to 

injure. 

The District Court here, in following -- New York Times 

and its progeny, correctly held that it is incumbent upon 

appellant here to prove actual malice if he is a public 

official. He went one step farther,, i1(3wever, and ruled that 

appellant also had to plead the facts to support the conclusion that the defamation was knowingly and/or recklessly 

published. In his memorandum, the District Court gave the 

following rationale for the above ruling: 

"The working principle I would rely on was stated 

by the Idaho Supreme Court before the Sullivan 

case. Gough v. Tribune-Journal Company, 1954, 

275 P2d 663, 667, 668." 

New York Times v. Sullivan, supra, does not require the 

additional pleading of the supportive fact, nor does Montana. 

See, Madison v. Yunker, supra; Rule 9, M.R.Civ.P. Therefore, the additional requirement is in error. 

On the second issue concerned with the pleading of special damages under the circumstances of this case, this 

Court had never specifically ruled on the matter before 

Madison. It has been well cared for in that opinion. 

On the matters before this Court, we find appellant has 

met the proper standard of pleading his cause. 

Therefore, the judgment and order of dismissal of 

plaintiff-appellant's complaint by the District Court is 
reversed, and the cause remanded to the District Court for 

further proceedings, consonant with this opinion. Costs to 

appellant. 

!u22 4 

Justice 

We concur: 

%A&*%-& 

Chief Justice 

- / - u&--Q ,M-+/ Justice 

Mr. Justice Daniel J. Shea dissents, and will file a written 

dissent later.