Case Name: Kemble & Mills of Pittsburgh, Respondent, v. George S. Kaighn and James G. MacFadyean, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-03-12
Citations: 131 A.D. 63
Docket Number: 
Parties: Kemble & Mills of Pittsburgh, Respondent, v. George S. Kaighn and James G. MacFadyean, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 131
Pages: 63–68

Head Matter:
Kemble & Mills of Pittsburgh, Respondent, v. George S. Kaighn and James G. MacFadyean, Appellants.
First Department,
March 12, 1909.
Libel—charge that corporation bribed defendant’s agent—failure to allege that libel was published prior to statute making such act misdemeanor^ when corporation must allege special damage.
A business corporation can maintain an action for libel without allegation and proof of special damage only where the language used concerning it is defamatory in itself and injuriously and directly affects its credit and necessarily and directly occasions pecuniary injury.
Where in an action by a foreign corporation on an alleged libelous letter charging merely that the plaintiff had bribed one of the defendant’s solicitors to disclose a list of the defendant’s clients, etc., there is no allegation that the bribery took place in the State of New York after the enactment of section 384r of the Penal Code making it a misdemeanor to give a gratuity to an agent with intent to influence his action in relation to his principal, and there is no allegation of special damage, or of facts showing that the statement had a tendency to cause the plaintiff to lose its customers or interfere with its business, the complaint fails to state a cause of action, even though the charge would he libelous if made against a natural person.
Houghton, JV, dissented, with opinion.
Appeal by the defendants, George S. Kaighn and another, from • an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the cleric of the county of Mew York on the 18th day of Movember, 1908, upon the decision of the court, rendered after a trial at the Mew York Special Term, overruling the defendants’ demurrer to the amended complaint.
Louis H. Porter, for the appellants.
William H. Ford, for the respondent.

Opinion:
Ingraham, J.:
This action is by a corporation organized under the laws of the State of West Virginia and carrying on the business of mercantile collections at various places, in the United States of America, including the State of Mew York, and the defendants are copartners in business. The complaint alleges that the defendants published a libel by sending a letter to one William S. Turner of Cincinnati, O., for which, it asks to recover damages. The letter contained a charge that the plaintiff has bribed one of the defendants' solicitors, who was an expert accountant and wdio had been going over the defendants' books and had given to the plaintiff a list of the defendants'' clients and their solicitors, and had been going around to the defendants' people " putting in the usual knock," and contained further charges against the solicitor who, it is alleged, was bribed. The only statement relating to the plaintiff is that it has bribed one of the defendants' solicitors, and the question is whether such a statement- about a corporation is libelous per se.
There is no innuendo alleged, nor is it stated that this bribery took place in the State of Mew York after the passage of chapter 136 of the Laws of 1905 (adding to Penal Code, § 384r), so that a violation of that-act was charged. We have, therefore, a published statement that á corporation had bribed the solicitor of a firm engaged in business in the State of Mew York.' The question is whether that is such a libel as will sustain an action by the corporation without the allegation of special damage.
It is now settled in this State that a corporation engaged in business may maintain an action for libel without allegation and proof of special damage, where the language used concerning it is defamatory in itself aiid injuriously and directly affects its credit and necessarily and directly occasions pecuniary injury. (Union Associated Press v. Heath, 49 App. Div. 247; New York Bureau of Information v. Ridgway-Thayer Co., 119 id. 339; Reporters' Assn. v. Sun Printing & Pub. Assn., 186 N. Y. 437.) In the latter case Judge Gray says: "A corporation has the right to maintain an action of libel when the publication assails its management or credit and inflicts injury upon its business or property;" that there has been some dispute in the cases as to the necessity of setting out the specific damage which a- corporation claims to "have suffered from a, libelous publication; that the better rule is that such an averment is not necessary when the language is of so defamatory a nature as to directly affect credit and to occasion pecuniary injury. A corporation thus having no character to be affected by libel and no feelings to be in jured, to be libelous per se the article must be such as directly to affect the credit or property of the corporation and to occasion it pecuniary injury, and unless such is the necessary result of the publication, to sustain the action the corporation must allege special damage. It is only where the court can see that by reason of the nature of the publication direct pecuniary injury will naturally flow from the publication that the action can be maintained without the allegation that such damage has actually resulted from the publication; the principle, as I understand it, being that as a corporation can only be injured by an act which causes it pecuniary damage, the publication, to be actionable, must either from its nature be such that its publication would cause such pecuniary injury, or else the complaint must allege that the publication of itself did cause such damage, specifying it so as to bring it within the rules relating to the allegation of special damage.
This article complained of makes no charge against the plaintiff as to the conduct of its business. It contains no reflection upon its method of conducting its business, or that can affect its property or credit. It undoubtedly charges the plaintiff with an act which would be injurious to the character of a private individual, for I assume that the charge that a private individual had bribed the employee of a -business firm would be libelousyw se ; but it cannot-be said that because a statement, if made relating to an individual, would affect his private character, it would when relating to a corporation necessarily affect its business, credit or property. I.t certainly cannot be assumed that any of the plaintiff's customers would have withdrawn their relation with, it because it was said that it had bribed the employee of a business firm. It is not even alleged that the plaintiff and the defendant are engaged in the same business, nor is any fact alleged which would show that such a statement would have a tendency to cause the plaintiff to lose its customers or to interfere with its business. It is a bald statement that a- corporation has been guilty of an act which, if applied to an individual, would have been disgraceful and libelous, but without any attempt of innuendo or special allegation to show that such a statement relating to a corporation can have any effect on its business, its credit or its property. It not appearing, therefore, upon the face of the complaint that this publication directly affects the credit or occasions pecuniary injury to the plaintiff, I do not think that the action can be maintained without an allegation of special damage.
The judgment'should be reversed, with costs, and the demurrer sustained, with costs, with leave to the plaintiff to serve an amended complaint within twenty days on payment of-costs in this court and ri tlie court below.
McLaughlin, Clarke and Scott, JJ., concurred ; Houghton, J., dissented.