Court Opinion

ID: 5846715
Source: CourtListenerOpinion
Date Created: 2022-01-12 23:48:02.128109+00
Date Added: 2024-06-11T08:43:56.796373
License: Public Domain

Mollen, P. J., and Titone, J.
(concurring in part and dissenting in part). In our view, the plaintiffs’ actions against the Times Herald Record and its publisher are inconsistent with the guarantees of the First Amendment and with the letter and spirit of section 74 of the Civil Rights Law. Accordingly, we respectfully dissent from so much of the majority’s holding as would deny the newspaper’s motion for summary judgment. Briefly stated, the facts pertinent to the issue are these:
In 1965 William J. Hambly was in the construction business. In or about May of that year, his firm, Hambly Construction Company, Inc., entered into a contract with the State of New York to build certain dormitories at a branch of the State University at Delhi, New York. In order to obtain the contract, the company was required to secure a performance bond, and, to that end, Hambly entered into an agreement with the Aetna Casualty and Surety Company. Aetna agreed to issue the bond and, in return, Hambly agreed personally to indemnify Aetna for any loss sustained on account of a default by his construction company in the completion of the dormitories. Subsequently, the company did in fact default on the job and Aetna was called upon to complete the construction. Aetna *127thereupon brought suit, inter alia, against the company and Hambly personally, as guarantor, for losses sustained upon the performance bond. In June, 1970, Aetna obtained a default judgment against the company in the amount of $124,425.54. Two years later, a judgment in Aetna’s favor was entered against Hambly personally in the sum of $277, 808.51 (later reduced to $147,593.47, plus interest). Hambly was represented in the action by attorney Michael A. Gurda.
When the judgments were returned unsatisfied, Aetna instituted an action seeking to set aside certain conveyanees of real property made by Hambly. Aetna alleged that those conveyances were fraudulent because they were knowingly made with actual intent to hinder, delay or defraud present or future creditors. Specifically, and as relevant here, Aetna complained of a transfer, made on November 2, 1970, when Hambly conveyed all his interest in certain properties to his attorney Michael A. Gurda and to Gurda’s son, Michael A. Gurda, Jr. Both Gurdas were therefore named as defendants in the action.
On April 19, 1979, following a non jury trial, the court issued a memorandum decision finding that Aetna was entitled to judgment on the first and fifth causes of action of each of its two amended complaints which had been consolidated for trial and which involved different parcels of property. The claims found to have been established in each instance were essentially that (1) with knowledge that Hambly had incurred debts to Aetna, the Gurdas agreed that Hambly would convey his interest in certain property to them so as to hinder, delay or defraud Aetna in the collection of moneys to which it was due or was to become due; and (2) the Gurdas accepted the conveyance from Hambly with knowledge and with intent to hinder, delay or defraud Aetna in the collection of the said moneys. The court also found that, in addition to a money judgment, Aetna was entitled to recover attorneys’ fees pursuant to section 276-a of the Debtor and Creditor Law.
In its decision, the court found that the evidence adduced at trial established “an actual intent to hinder or delay [Aetna] in satisfying any judgment which [Aetna] might *128recover against * * * Hambly.” The court noted additionally that “ [w] hether or not [Aetna] proved an actual intent on the part of * * * Hambly to defraud [Aetna] is not determinative of this case. Actual intent to hinder or delay was proved and that is sufficient to satisfy the language of [section 276 of the Debtor and Creditor Law].”
The dispute now before this court arose out of the publication of an article about the ease in the Times Herald Record, a Middletown newspaper published by Orange County Publications, a division of Ottaway Newspapers, Inc. Above the masthead of its April 21, 1979 edition, the paper ran a headline which read:
“Judge: Gurdas, builder defrauded firm”
The headline, which appeared with others on the front page, referred the reader to page 3 of the paper. On that page an article regarding the case appeared under the headline:
“Gurdas, builder fined in fraud case”
The article read in pertinent part as follows:
“An acting state Supreme Court justice has found that Middletown attorneys Michael A. Gurda, Sr., his son, Michael Jr., and a former local contractor defrauded an insurance company through the 1970 sale of land along Dolson Avenue in Middletown * * *
“ [The justice] found the Gurdas and contractor William J. Hambly defrauded the Aetna Casualty and Surety Co., when the contractor sold his half-interest in the 26-acre parcel to the attorneys in November 1970. If the ruling withstands an expected appeal, it would force the Gurdas and Hambly to pay $185,000 and legal fees, which have not yet been determined.
“The defendants in the case are not required to pay the penalty until the appeal process is exhausted * * *
“ ‘Based on a review of the decision, [the Judge] found that Mr. Gurda and his son were guilty of intentional fraud at a time he [sic] was an attorney of law admitted to practice in the State of New York’ said Howard Karger of the Newburgh law firm * * * representing Aetna”.
The article went on to trace the somewhat complex history *129of the litigation and liberally quoted from the court’s decision.
Following the publication of the article, the Gurdas each instituted a defamation action against the Times Herald Record, its publisher, and attorney Howard Karger. The Gurdas’ complaints were essentially identical, each asserting the same three causes of action. The first, against the paper, was predicated upon the front-page headline, “Judge: Gurdas, builder defrauded firm”; the second, also against the corporate defendants, was based upon the inside headline and the portion of the article quoted above, with the exception of the two sentences concerning the amount of the “penalty” assessed and when that “penalty” would have to be paid; the third cause of action was against Karger for the comment attributed to him by the newspaper. Special Term granted the defendants’ motions for summary judgment and dismissed the complaints. The entire court agrees that, because Karger’s remark constituted a protected expression of opinion, the causes of action against him were properly dismissed. However, the majority reverses Special Term’s judgments insofar as they dismissed the causes of action in each complaint directed against the newspaper and its publisher. The majority holds that there are triable issues of fact regarding whether the Gurdas were libeled by the newspaper report. It is with this conclusion that we disagree.
The plaintiffs’ case against the corporate defendants rests entirely upon the use of three words in the headlines and body of the article. Those words are “defrauded”, “fraud”, and “fine”. As to the first two, the majority would deny summary judgment to the paper because (1) “in actions * * * for defamation * * * words are to be construed as persons generally understand them and according to their ordinary meaning”, (2) “the terms ‘fraud’ and ‘defraud’ can connote criminal activity”, and (3) “a jury could well find that the ordinary meaning of the terms ‘fraud’ and ‘defraud’ is the criminal one”. The court makes a similar finding with respect to the word “fine,” noting that that term “has been defined as monetary punishment imposed upon a person or other entity ‘convicted of [a] crime or misdemeanor’ ”.
*130It is true that the words, “fraud” and “defraud” do appear in some of our criminal statutes (see, e.g., Penal Law, art 185). Yet dictionary definitions speak of “trickery” or “deceit” especially involving “misrepresentation,” and not of criminal acts. (See, e.g., Webster’s Third New International Dictionary.) Similarly, it is certainly true that fines are sometimes imposed as a consequence of a criminal conviction. (See Penal Law, art 80.) But the suggestion that the term has exclusive or even primary reference to criminal conduct would undoubtedly come as an unpleasant surprise to those who have misjudged the time remaining on a parking meter or who have been late in returning a book to a public library. However, it is not merely the ambiguity of these words that leads us to con-elude that they will not support the libel actions at bar. Instead, it is the context and subject matter of the article in which they appear, measured in light of the constitutional and statutory protections afforded to the press, that persuades us that these complaints must be dismissed.
Whenever a libel action is brought against a newspaper, the courts are called upon to strike a balance between the individual’s right to protect his good name and the guarantees of the First Amendment which safeguard the people’s right to an active, thriving and untrammeled press, an indispensable component of any free and democratic society. (See, e.g., Schermerhorn v Rosenberg, 73 AD2d 276, 283.) As the majority correctly observes-, in resolving these cases “[i]t has long been the rule that words charged to be defamatory are to be taken in their natural meaning and that the courts will not strain to interpret them in their mildest and most inoffensive sense to hold them nonlibelous.” (Mencher v Chesley, 297 NY 94, 99, Fuld, J.) Yet, by the same token, it has been said that “[w]hen the truth is so near to the facts as published that fine and shaded distinctions must be drawn and words pressed out of their ordinary usage to sustain a charge of libel, no legal harm has been done.” (Cafferty v Southern Tier Pub. Co., 226 NY 87, 93; see, also, George v Time, Inc., 259 App Div 324, 328-329, affd 287 NY 742.) This latter principle seems most applicable to the circumstances at bar.
*131Among the most significant functions served by the First Amendment is to protect the right of free access to information concerning the workings of our public institutions. In recognition of the importance of this purpose, this State has fortified the guarantees of the First Amendment by enacting statutes which afford absolute immunity from libel actions to certain reports of public proceedings. (See, e.g., Farrell v New York Evening Post, 167 Misc 412, 416.) The statute now performing that function is section 74 of the Civil Rights Law, which provides in pertinent part: “A civil action cannot be maintained against any person, firm or corporation, for the publication of a fair and true report of any judicial proceeding, legislative proceeding or other official proceeding, or for any heading of the report which is a fair and true headnote of the statement published.”
The purpose of providing immunity to fair and true reports of judicial proceedings is said to be to encourage the dissemination of information concerning the judicial branch of government and thereby to serve the public interest “in having proceedings of courts of justice public, not secret, for the greater security thus given for the proper administration of justice.” (Lee v Brooklyn Union Pub. Co., 209 NY 245, 248; see, also, Shiles v News Syndicate Co., 27 NY2d 9, 14.) In examining the scope of protection afforded by section 74 of the Civil Rights Law, our Court of Appeals has observed: “For a report to be characterized as ‘fair and true’ within the meaning of the statute, thus immunizing its publisher from a civil suit sounding in libel, it is enough that the substance of the article be substantially accurate. As stated by this court in Briarcliff Lodge Hotel v Citizen-Sentinel Publishers (260 NY 106, 118): ‘[A] fair and true report admits of some liberality; the exact words of every proceeding need not be given if the substance be substantially stated.’ (See, also, Keogh v New York Herald Tribune, 51 Misc 2d 888, 894, affd 28 AD2d 1209, mot for lv app den 21 NY2d 955; George v Time, Inc., 259 App Div 324, 328-329, affd 287 NY 742; Hanft v Heller, 64 Misc 2d 947; Edmiston v Time, Inc., 257 F Supp 22, 24-26.)” (Holy Spirit Assn. for Unification of World Christianity v New York Times Co., 49 NY2d 63, 67.) It is *132from this perspective that we must examine the contentions at bar.
The Gurdas complain that they were defamed by the headlines and article .which stated that they had been found to have “defrauded” Aetna and they had been “fined” in a “fraud” case. Regardless of the specific factual findings rendered, the fact remains that the court unequivocally held that the Gurdas had violated section 276 of the Debtor and Creditor Law. That section provides: “276. Conveyance made with intent to defraud. Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors.” (Emphasis supplied.)
In light of this statutory language, we cannot agree with the majority that the corporate defendants may be found liable for defamation for using the words “fraud” and “defrauded,” for we conclude as a matter of law that, in reporting judicial proceedings, a newspaper may not be held to a stricter standard in the correct use of technical and legal terms than is the Legislature which drafted the statutes themselves. Plainly, a newspaper must be afforded immunity under section 74 of the Civil Rights Law when it reports on judicial proceedings using the very language of the statutes at issue in those proceedings.
Moreover, as to the word “fine,” although it is clear that no fine, as such, was imposed, the court did rule that, in addition to a money judgment, Aetna was entitled to attorneys’ fees pursuant to section 276-a of the Debtor and Creditor Law. The award of attorneys’ fees in this case was, in actuality, not entirely unlike the imposition of a fine since it was permissible only upon a finding that the Gurdas had been party to a “fraudulent” transfer within the meaning of the statute. (See Debtor and Creditor Law, § 276-a.) Clearly, the award of counsel fees could well have been seen as a penalty or “fine” by one untutored in the law. And, in determining whether the paper’s use of the word was unreasonable, we are guided by the observation of the Court of Appeals in Holy Spirit Assn. for Unification of World *133Christianity v New York Times Co. (49 NY2d 63, 68, supra) : “ [N] ewspaper accounts of legislative or other official proceedings must be accorded some degree of liberality. When determining whether an article constitutes a ‘fair and true’ report, the language used therein should not be dissected and analyzed with a lexicographer’s precision. This is so because a newspaper article is, by its very nature, a condensed report of events which must, of necessity, reflect to some degree the subjective viewpoint of its author. Nor should a fair report which is not misleading, composed and phrased in good faith under the exigencies of a publication deadline, be thereafter parsed and dissected on the basis of precise denotative meanings which may literally, although not contextually, be ascribed to the words used.”
Freedom of expression must have breathing space to survive (cf. National Assn. for Advancement of Colored People v Button, 371 US 415,433). Newspapers cannot be held to a standard of strict accountability for use of legal terms of art in a way that is not precisely or technically correct by every possible definition. Were it otherwise, the narrow and confining application of the libel laws would entirely defeat the purposes of the First Amendment and statutes like section 74 of the Civil Rights Law, and the public’s right to know would be seriously threatened. (See Grobe v Three Vil. Herald, 69 AD2d 175, affd 49 NY2d 932.) Hence, in areas of doubt and conflicting considerations, it is almost always preferable to err on the side of free expression. (See Hotchner v Castillo-Puche, 551 F2d 910, 913, cert den sub nom. Hotchner v Doubleday & Co., 434 US 834.) Compelling the corporate defendants here to stand plenary trial for libel would, in our view, do violence to these fundamental principles. We therefore conclude that all the dewere entitled to summary judgment dismissing the complaints and, accordingly, we would affirm the judgments appealed from in all respects.
Hopkins and Lazer, JJ., concur with Weinstein, J.; Mollen, P. J., and Titone, J., concur in part and dissent in part, in an opinion.
Two judgments of the Supreme Court, Orange County, both dated September 17,1979, modified, by deleting there*134from the provisions granting summary judgment to all the defendants and substituting therefor provisions granting summary judgment only to defendant Howard Karger. As so modified, judgments affirmed, without costs or disbursements, and the complaints are reinstated as to the corporate defendants.