No. 13579 

IN THE SUPREElE COURT OF THE STATE OF MONTANA 

JEFFREY GRANGER and DAVID GRANGER, 

Plaintiffs and Appellants, 

-vsTIME, INC., a Corporation, 

Defendant and Respondent. .................................................... 

PHOEBE ANN GOLD; DR. ALLAN J. GOLD; 

ERNEST P. COHEN; JESSE M. COHEN; 

OLIVER R. LEVY; J.M. SHERICK and 

DIANE M. SHERICK, Husband and Wife, 

and JODI, INC., 

Plaintiffs and Appellants, 

-vsTIME, INC., a Corporation, 

Defendant and Respondent. 

Appeal from: District Court of the Second Judicial District, 

Honorable Robert J. Royd, Judge presiding. 

Counsel of Record: 

For Appellants: 

Henningsen, Purcell & Genzberger, Butte, Montana 

Rex F. Benningsen appeared, Butte, Montana 

Corette, Smith & Dean, Butte, Montana 

Kendrick Smith argued, Butte, Montana 

For Respondents: 

Crowley, Haughey, Hanson, Gallagher and Toole, Billings 

Montana 

Bruce R. Toole argued, Billings, Montana 

Harold R. Medina, Jr. argued, New York, New York 

Submitted: May 19, 1977 

Decided: AUG 3 (1 1977 

Filed: RUG 3 797 
Mr. Chief Justice Paul G. Hatfield delivered the Opinion of the 

Court. 

Plaintiffs appeal from the district court's ruling in 

this libel action granting defendant's motions for summary 

judgment. 

Defendant, Time, Inc., publishes a national weekly news 

magazine. The subject of this lawsuit concerns an article which 

defendant published in its September 22, 1975, issue, entitled 

"Into the Pit". The article described how the City of Butte, 

which owed its birth and former prosperity to first gold, and 

then copper mining was being relentlessly swallowed by Anaconda 

Company's ever expanding open pit copper mining operation. Defendant in the article noted the economic deterioration in "the 

once-stylish uptown district", observed that virtually no major 

construction had taken place in Butte since 1962, and asserted 

that "Arson has become common as people who are unable to sell 

their devalued buildings burn them for the insurance." 

Each of the plaintiffs had ownership interests in either 

the Penney Building or the Pennsylvania Building. Fire destroyed 

the Penney Building on February 28, 1972, and destroyed the Pennsylvania Building on August 20, 1975. Plaintiffs, in a letter 

dated October 29, 1975, informed defendant that they believed the 

statement in the article concerning arson referred particularly 

to them and was false and libelous. Plaintiffs informed defendant of its opportunity under section 64-207.1, R.C.M. 1947, to 

correct the allegedly libelous matter. Defendant failed to retract its statement concerning arson in the manner prescribed 

by the statute, and plaintiffs, on December 19, 1975, filed a 

complaint in district court, Silver Bow County, alleging that 

defendant had libeled them by the statements concerning arson in 

the article, "In the Pit". 

Defendant filed a motion to dismiss plaintiffs1 complaints 
for failure to state a claim upon which relief could be granted. 

The district judge denied defendant's motion to dismiss. Defendant subsequently filed its answer, denying the assertions in 

plaintiffs' complaints that the arson statement was made of and 

concerning plaintiffs and that the article was prepared with a 

reckless disregard of the truth, and asserting that the statements 

contained in the article were protected by the freedom of speech 

and press guarantees of the First Amendment. 

Plaintiffs and defendant thereafter filed the following 

four exhibits: 

(1) An "Editorial Reference File", containing the reference material upon which defendant based its article and the successive drafts of the article; 

(2) a "Memorandum for Counsel", containing interviews 

with the persons involved in the investigation, writing, and publishing of the article; 

(3) "The Butte Fire Memorandum", containing copies of 

the fire incident statistical reports of the State Fire Marshall 

Bureau of the State of Montana, Department of Justice, for the 

years ending 1974 and 1975 and an analysis of fires during 1965- 

1975 in an arbitrarily selected 58 square block area in the central 

business district of Butte; and, 

(4) a "Memorandum of Testimony" on behalf of plaintiffs, 

containing interviews with each of the plaintiffs and with their 

attorney. Plaintiffs and defendants stipulated that the statements of tile Time, Inc., employees and statements of plaintiffs 

and their attorney as contained in the exhibits, were what " * * * 

in substance and effect" they would testify to "for the purpose 

of any motion or for the purpose of trial * * *." 

Defendants, on May 6, 1976, filed a motion for summary 

judgment and a memorandum in support of their motion. Plaintiffs, 
on May 17, 1976, filed a cross-motion for summary judgment, 

solely on the issue of liability, and likewise supported their 

motion with a legal memorandum. On May 19, 1976, defendant moved 

to disqualify the district judges of the second judicial district, 

Silver Bow County. The Honorable Robert J. Boyd, judge of the 

third judicial district, was thereupon appointed to hear all 

further matters in the cause. 

Plaintiffs and defendant argued the merits of their respective motions for summary judgments before Judge Boyd on July 

9, 1976. The district judge entered summary judgments far defendant because: 

"Viewing the matter as a stranger and with no 

special knowledge possessed of the parties, 

the Court is unable to ascertain any language 

in the article which refers to some ascertainable 

or ascertained person * * *." 

Plaintiffs raise the following issues in their appeal 

from the district court ruling: 

1. Did the district judge, by granting defendant's motions 

for summary judgment, reverse the previously disqualified district 

judge's denial of defendant's motion to dismiss and thereby improperly exercise appellate jurisdiction? 

2. Did the evidence support the district court's granting 

of defendant's motions for summary judgment? 

Plaintiffs contend that Judge Boyd was without jurisdiction to grant defendant's motions for summary judgment. District 

Judge James Freebourn had earlier denied defendant's motions to 

dismiss plaintiffs' complaints for failure to state a claim. 

After Judge Freebourn was disqualified and Judge Boyd was assigned 

to the case, Judge Boyd granted defendant's motions for summary 

judgments. Plaintiffs assert that Judge Boyd's granting of defendant's motion for summary judgments was the equivalent of a 

reversal of Judge Freebourn's denial of defendant's motions to 
dismiss, and an improper exercise of appellate jurisdiction by 

a trial judge. 

The obvious flaw in plaintiffs' argument is that motions 

to dismiss for failure to state a claim and motions for summary 

judgment are distinct motions involving different questions of 

law, and having different legal effects. Rule 12 (b) (6) , M.R. 

Civ.P., motion to dismiss is based solely on the allegations that 

a plaintiff has made in his complaint. The denial of defendant's 

motions to dismiss by Judge Freebourn was the law of the case 

solely as to the sufficiency of the complaint. The denial of the 

motions to dismiss meant that, in light of the complaint alone, 

the trial court could not state " * * * for certain that plaintiff 

is entitled to no relief under any state of facts which might be 

proved in support of the claim." Keilrnann v. Mogan, 156 Mont. 

230, 233, 478 P.2d 275. 

Judge Boyd's granting of defendant's Rule 56, M.R.Civ.P., 

motions for sumnzary judgment, however, was a decision on the 

merits of the case, and not merely a determination of the sufficiency of the allegations in the complaint. In granting defendant's motions for summary judgment, Judge Boyd considered matters 

outside the complaint, including briefs and oral arguments of 

counsel, written statements of witnesses, and various statistical 

data concerning fires in Butte. The granting of the motions for 

sumnzary judgment signified that, in light of the complaint and the 

evidence before the court, there remained no disputed material 

issue of fact which plaintiffs could prove to entitle them to recover. Judge Boyd properly exercised his trial court jurisdiction in ruling on the motions for summary judgment. See Amann v. 

Northern Pacific Railway Co., 130 Mont. 11, 18, 292 P.2d 753 (1955), 

for an expression of this rationale in a pre-rules case. 

Plaintiffs next contend that the trial judge erred in 
granting defendant's motions for summary judgments. The trial 

judge held, as a matter of law, that the statement that "Arson 

has become common as people who are unable to sell their devalued 

buildings burn them for the insurance" does not point to any 

ascertainable person. The judge further noted that nothing in 

the record indicated that the buildings owned by plaintiffs were 

"devalued". Finally, the trial judge recognized that, based on 

the information contained in the "Butte Fire Memorandum" exhibit, 

the group of "people who are unable to sell their devalued buildings" could include from 204 to 481 persons. Because plaintiffs 

had not, in the trial court's view, presented evidence sufficient 

to raise a factual question as to whether they were the specific 

people in the group referred to, the court held that the common 

law group libel rule precluded their recovery. 

Plaintiffs agree that there is no material issue of fact 

as to liability, but assert that, as a matter of law, they should 

be granted summary judgment as to liability, with damages to be 

determined at trial. Plaintiffs assert that defendant is clearly 

liable for libel under section 64-203, R.C.M. 1947, because the 

article was printed by defendant, distributed in Montana and nationwide, falsely accused plaintiffs of a crime (arson) and was written 

"of and concerning the Plaintiffs." 

The crucial issue in this case, as to defendant's liability for defamation under Montana law, is whether the article 

was published "of and concerning" plaintiffs. See Rowan v. Gazette 

Printing Co., 74 Mont. 326, 331, 239 P. 1035; Schaffroth y. he 

Tribune, 61 Mont. 14, 17, 201 P. 271. Where a plaintiff is not 

named in the allegedly libelous statement, he may present evidence 

of the surrounding circumstances and facts to meet his burden of 

proving that he was the person to whom the statement referred, 

Nolan v. Standard Publishing Co., 67 Mont. 212, 216 P. 571. If 
the arson charge in the article was false and was understood by 

readers to specifically refer only to plaintiffs or to refer to 

plaintiffs as members of a group small enough that the defamation 

may reasonably be understood to apply to each group member, plaintiffs could recover. If, however, the statement concerning people 

burning their buildings was reasonably understood by readers of 

the article to refer to a large group, of which plaintiffs were 

members, neither plaintiff nor any other member of the large group 

has a cause of action for defamation. 3 Restatement of Torts 2d, 

5564A. "As the size of the group increases, it becomes more and 

more difficult for the plaintiff to show he was the one at whom 

the article was directed, and presently it becomes impossible.* * * " 

Louisville Times v. Stivers, 252 Ky. 843, 68 S.W.2d 411, 412. 

The district judge, in granting defendant's motions for 

summary judgment, relied on information contained in the "Butte Fire 

Memorandum" exhibit. The memorandum, which contained records of 

the Butte Fire Department and the State Fire Marshall Bureau of 

the Montana Department of Justice, showed that during the period 

1965-1975 in uptown Butte there were 159 fires, 56 of which were 

attributed to arson, in buildings owned by a minimum of 204 persons. 

In the entire city of Butte during 1974-1975, there were 481 fires, 

108 of which were attributed to arson or suspicious acts. The 

district judge held that using either the 204 or 481 figures, the 

group of owners of buildings which had burned was too large to 

cause a reader of the article to reasonably believe that the arson 

charge was directed at plaintiffs. 

Did plaintiffs prove by extrinsic facts and circumstances 

that there remained a material issue of fact as to whether the 

seemingly broad statement in the article, charging "people" with 

burning their devalued buildings for the insurance, in fact was 

reasonably understood by certain readers to be specially directed 
at these plaintiffs? Plaintiffs rely on the following facts in 

the court's exhibits: The investigator and author of defendant's 

article talked with people about only four fires in uptown Butte, 

two of which fires are the subject of this litigation; defendant 

had no information at the time it published its article as to any 

of the other fires listed in the "Butte Fire Memorandum"; no stipulation was made as to the cause of the fires or their relevancy; 

a prior draft of the article referred to "businessmen" burning their 

devalued buildings, which was changed to the published reference to 

"people" on the advice of the article's author that they could not 

state as a fact that local businessmen were the ones committing the 

arson. Plaintiffs assert that these facts show that defendant 

specifically had plaintiffs in mind by its reference in the article 

to "people" and that printing the arson charge, despite the author's 

warning that they could not prove that businessmen were arsonists, 

constituted actual malice due to a "deliberate disregard of the 

truth and a reckless disregard of the falsity of the statement." 

Plaintiffs have failed to show that the arson charge, 

applicable on its face to a very large group, was reasonably understood to apply specifically to plaintiffs. Even if we assume 

arguendo that the author of defendant's article had knowledge of 

only four fires in the business district, and that defendant meant 

in its article to refer only to those four fires, and even if we 

further igno~defendants statements to the contrary, plaintiffs 

have failed to meet their burden of establishing a case for defamation. Whom the author has in mind when he publishes his article 

is not determinative of the issue of liability. Libel and damage 

consist in the apprehension of the hearers, not in the mind of the 

author of the statement. Goldborough v. Orem & Johnson, 103 Md, 

671, 64 A. 36. " * * * Plaintiff sought to show by circumstances 

that the writer of the published article had him in mind, but his 
unpublished intention is not material." Brodsky v. Journal 

publishing Co., 73 S.D. 343, 42 N.W.2d 855, 857; Accord, Helmicks 

v. Stevlingson, 212 Wis. 614, 250 N.W. 402. 

Nor is it relevant to establishing a libel cause of action 

that plaintiffs perceived that the allegedly defamatory statement 

applied to them. In order that there be actionable libel, under 

section 64-203, R.C.M. 1947, a plaintiff must show that people 

in the community other than the plaintiff perceived the statement 

to refer to the plaintiff. Without satisfying this requirement, 

there clearly would not be the injury to reputation or occupation 

that the statute requires. " * * * the test is neither the intent 

of the author nor the recognition of the plaintiff himself that 

the article is about him, but rather the reasonable understanding 

of the recipient of the communication." Robinson v. Guy Gannett 

Publishing Company, 297 F.Supp. 722, 726 (D. Maine 1969). 

Plaintiffs in this case could have introduced as evidence 

the statements of readers familiar with the circumstances in Butte 

at the time the article was published to show that on reading the 

article the readers knew the arson accusation was directed at 

plaintiffs. Marr v. Putnam, 196 Or. 1, 246 P.2d 509, 516; Houston Printing Co. v. Moulden, 15 Tex.Civ.App. 574, 41 S.W. 381, 

386. Plaintiffs evidence in their exhibit "Memorandum of Testimony and Statement", however, dealt solely with plaintiffs own 

emotional reactions to the article. The only references to reactions of others were statements by plaintiffs themselves concerning a comment made to one plaintiff at a cocktail party that 

the statement in the article was a terrible thing to do to him 

and other property owners, and the statement of another plaintiff 

that, although people told her the article was inaccurate and an 

unfair statement, no one accused her of setting the fire, except 

perhaps in a joking manner. 

Plaintiffs have agreed that all matters were before the 
court, from the pleadings and exhibits, on which to render a 

decision as to liability. If readers of the allegedly libelous 

article reasonably concluded that the arson charge was directed 

at plaintiffs, plaintiffs failed to introduce any readers' statements to that effect, and failed to offer any reason for their 

failure to include such statements in the exhibits offered to 

the district court. " * * * When on the record there is no 

genuine issue as to any material fact before the court the burden is on the party opposing the motion for summary judgment to 

present facts of a material and substantial nature raising a 

genuine issue. The trial judge has no duty to anticipate possible 

proof that might be offered." Brown v. Thornton, 150 Mont. 150, 

155, 432 P.2d 386 (1967). From the pleadings and exhibits, we 

can discern no evidence to show the general statement in the 

article as to arson was reasonably understood by readers to 

specially apply to plaintiffs rather than to the large group of 

200-400 "people" whose buildings in Butte were destroyed by fire. 

In denying relief to a taxicab driver who was a member 

of a defamed group of 60 taxi drivers, the District of Columbia 

District Court stated: 

"In case of a defamatory publication directed 

against a class, without in any way identifying 

any specific individual, no individual member of 

the group has any redress. The reason for this 

rule is that ordinarily a defamatory statement 

relating to a group as a whole, does not necessarily 

apply to every single member. A minority not intended to be castigated has no legal cause for 

complaint * * *." Fowler v. Curtis Pub. Co., 

78 F.Supp. 303, 304-305 (D. D.C. 1948), aff'd., 182 

F.2d 377 (D.C. Cir. 1950). 

Because the allegedly defamatory statements cannot reasonably be interpreted as applying specifically to plaintiffs, the 

common law group libel rule precludes their recovering in a 

defamation action. We adhere to this common law principle because the definition of libel in section 64-203, R.C.M. 1947 "is 
but a statement of the common law rule". Manley v. Harer, 73 

Mont. 253, 260, 235 P. 757. It is therefore unnecessary to 

discuss whether the statement in the article concerning arson 

was in fact true, or whether plaintiffs even fell within the 

article's description of owners of "devalued" buildings. 

Plaintiffs and defendant have also extensively and ably 

argued the issue of whether defendant's statements in the article 

would be protected by the First Amendment, in the event that the 

statements ran afoul of Montana's libel law. The parties have 

discussed the Supreme Court decisions in New York Times Co. v. 

Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L Ed 2d 686, 95 ALR2d 

1412; Gertz v. Welch, 418 U.S. 323, 94 S.Ct. 2997, 41 L Ed 2d 789; 

and Time, Inc. v. Firestone, 424 U.S. 448, 96 S.Ct. 958, 47 L Ed 2d 

154, and have argued what standard of fault this state should require a plaintiff to prove in libel actions involving a defamed 

private party plaintiff and a broadcaster or publisher defendant. 

This issue requires a careful balancing of the First Amendment 

freedoms of speech and press, and the personal dignity interests 

underlying the law of defamation. Because this case has been 

settled on a nonconstitutional basis, we save for another day the 

determination of whether a publisher who defames a private party 

shall be liable in this state for "negligent" publishing of the 

libelous statements or only for libelous statements published 

with "actual malice". 

The judgment of the 

Chief Justice. 
We concur: 

Justices V