Court Opinion

ID: 8265398
Source: CourtListenerOpinion
Date Created: 2022-10-16 16:00:35.242219+00
Date Added: 2024-06-11T16:43:19.824463
License: Public Domain

GOODE, J.
(after stating the facts). — Doubtless what was intended by the fraud order said in the alleged *370libel to have been issued by the Postmaster-General, was an order based on the statute of the United States authorizing that official to instruct postmasters to return all registered letters to the postmaster of the office if they were mailed, with the word “fraudulent” plainly written or stamped on the outside, in cases where such letters arrived directed to a person, firm, bank, corporation or association of any kind, on evidence satisfactory to the Postmaster-Geeneral that the person, bank, company or association is engaged in conducting a lottery ... or any scheme or device for obtaining money or property of any kind through the mails by means of false or fraudulent pretenses, representations or promises. [2 Compiled Stat. U. S. (1901), sec. 3929.] In support of the judgment below it is argued the supposed libelous matter, to-wit, “the funds of the institution were being misapplied,” was no reflection on the bank itself, but on its officers, and if actionable at all, was so only on behalf of said officers; not of the bank. Proceeding with this argument, it is said that if the words meant the bank was being improperly and illegally managed and conducted, as the bank could not conduct itself, the statement did not libel the bank. In dealing with this question we have looked into every authority we could find without becoming sure what the law is. A bank or other business corporation may maintain an action for a libel which affects its pecuniary interests by casting an imputation on its solvency, the honesty of its management or, in the case of a vending or manufacturing corporation, on the quality of its wares or products. [Odgers, Libel and Slander, 552; Townshend, Libel and Slander (4 Ed.), sec. 263.] But a company cannot recover for words which do not libel it, but its individual members; at least unless it suffers a special damage from the libel, and none is alleged in the present case. [Odgers, supra.] The point of doubt is whether the words declared on in the present case reflect on the bank itself so di*371rectly instead of incidentally, as to libel it. To say a clerk of a merchant had embezzled a large part of the merchant’s capital might impair confidence in the latter’s solvency, so as to enable him to maintain an action for libel if special damage was averred-and proved. "We do not think the charge would be actionable per se at the suit of the employer. As regards a corporation the conditions are somewhat different, for it can only act through its officers. Our best judgment is, the libel in question is expressed in such a form that it might be understood naturally to mean the managing officers of the institution, by acts which were those of the corporate body, were applying its funds to purposes and in ways a banking company is not allowed to apply funds; not that said officers were, as individuals, applying the funds in illegal ways for their own benefit or some one else’s — that they were misapplying by acts of the corporate body. The context of the alleged libel is pointed to in the petition as explanatory of the object and meaning of the libel. That context said a fraud order had been issued against the People’s United States Bank, thereby designating as the object, of the order the corporation itself. It then proceeded to say the reason for the action of the Postmaster-General was that sales of the bank’s stock had been made and deposits induced upon false representations and promises and the funds of the institution were béing misapplied. A bank would induce deposits, whether by fair or by false representations, in the way the bank would do any other act. It is true the officers would move in the matter and by their conduct deposits would be induced; but nevertheless the inducement would be regarded as having been made by the bank. The conduct imported by the words charged as libelous — that thefundsof the institution were being misapplied — is not so obviously corporate conduct, for the reason that it might be taken to mean the funds were embezzled or otherwise misapplied to the detriment of the institution and its share*372holders. But the expression, “the funds of the bank were misapplied” could be understood to signify it was being illegally managed and conducted by those in control in order to make money for it and its stockholders by speculation and other unlawful methods. If the libel would be naturally taken to mean unlawful corporate action in dealing with the funds, it libeled the corporation, whether the illegal application was intended to profit it or not. Such conduct would tend to deprive ’ the bank “of the benefits of public confidence,” to quote words from our statute defining libel. [R. S. 1899, sec. 2259. ] We have found many cases wherein libelous matter which discredited the solvency of a corporation or was likely to injure its trade or business was held to be actionable by the company and that too without averment or proof of special damage — a point that might as well be disposed of here. [Shoe & Leather Bank v. Thompson, 18 Ab. Pr. 413; Knickerbocker Ins. Co. v. Ecclesine, 42 How. Pr. 198, 207; Arrow Steamship Co. v. Bennett, 73 Hun 81; Railroad v. Publishing Co., 48 Fed. 206; American Book Co. v. Gates, 85 Fed. 729; Sternburg Mfg. Co. v. Miller, etc., Mfg. Co., 170 Fed. 298; Printing Co. v. Maclean, 23 Ont. App. 324; Coal Co. v. News Assn., L. R. 1 Q. B. (1894) 133; Linotype Co. v. Typesetting Co., 81 L. T. 332; Gas. & Coal Co. v. Rose, 126 Wis. 34; Filtration Co. v. Lingane, 19 R. I. 316; Midland Pub. Co. v. Trade Journal, 108 Mo. App. 223, 83 S. W. 298; Martin Co. Biank v. Day, 73 Minn. 195.] If the matter alleged libeled plaintiff, we have no doubt the petition is good though it contains no averment of special damage, and this the authorities supra demonstrate. In only two of them, we believe, or at most three, were the libelous words of such import as to bring the decision into point on the question of whether the libel charged in the petition at bar can be taken to libel the plaintiff. In Biank v. Day, supra, the publication called some one a “Shylock,” spoke of him as “shouting, ‘Plenty of money,’ while at *373the same time he was losing in every line of business;” said it was an open secret he “had bitten off more than he could chew and was having hard sledding financially; that the county money was his only salvation.” The complaint alleged a man by the name of Ward who was the principal stockholder of the bank, one of its main officers, actively engaged in its management, well known in the community, was referred to by the word “Shylock;” that the plaintiff was referred to through him as its agent and manager and the people who read the article so understood it. The complaint was demurred to mainly on the ground it appeared the words published could not apply to the bank. The Supreme Court of Minnesota said the language was clearly defamatory and if used in reference to the corporation, contained an imputation of insolvency and tended to impair its credit. Further reasoning on the question, the court said a corporation could only act through its managing officers, and if the article referred to the financial condition of the bank as produced by Ward as its managing agent, and the bank and Ward were so identified in popular understanding and speech that the article would be defamatory of the bank, though it appeared on its face to refer to Ward personally, then it might be shown by extrinsic facts the article referred to plaintiff and would be so understood by those who read it. That case goes far and much farther than we need go to hold the matter in question in the present case was defamatory of plaintiff. As said, it probably would be understood to charge the plaintiff bank with dishonest and illegal management of its funds, and thereby impair confidence in its stability and diminish its custom. In Shoe & Leather Bank v. Thompson, the alleged libel said there were counterfeit notes of the bank and the signatures on the genuine notes were so alike, the bank’s officers were in doubt which were good. Those words were held to libel the bank as tending to injure its business and impair its credit. In *374Linotype Co. v. Typesetting Co., the libel discredited the efficiency of typesetting machines manufactured by the plaintiff, by saying five of said machines had been used in a newspaper office for a short time and removed after trial.' The contention was this criticism of the machines manufactured by the plaintiff did not libel the plaintiff. The court held otherwise, on reasoning, the effect of which is that the publication would injure the business of the company by injuring the reputation of its machines, and was a reflection on the plaintiff in the way of its trade. Two analogous cases were cited in the opinion in support of its doctrine and do support it; which is enough to say, without digesting, them. [Harmon v. Delaney, 2 Stra. 898; Evans v. Harlowe, 5 Q. B. 624.] In Railroad Co. v. Pub. Co., 48 Fed. supra, the court said language which charged a railway company with such incapacity or neglect in conducting its business that belief in the truth of the charge would cause persons not to employ it as a common carrier, was libelous. Similar statements of the law may be found in other cases; and, of course, neglect and misconduct in management would result from resolutions and actions of the officers of a corporation, just as a misapplication of the funds of plaintiff bank would; but in either instance the conduct of the officers would be, in legal consequence, the conduct of the company. Therefore the courts seem to hold that an accusation of misconduct on the part of corporate officers when acting as and for the corporation, which discredits the solvency of the company or will impair its business, is a libel on the corporation.
It is urged for defendants the words charged cannot be regarded as a libel, because they were the statement of a reason, whether a statutory one or not, why the Postmaster-General issued a fraud order against plaintiff. On the face of the petition it is ambiguous whether , the publication intended to say the Postmaster-General had assigned such a reason for his order, or the *375defendants were undertaking to explain the issue of the order by imputing reasons to the Postmaster-General. If that official gave no such reason, then defendants are liable unless they can prove the truth of the charge. The question of difficulty is whether or not, if the Postmaster-General did assign the published matter as a reason for his action, this clothes said matter with a quasi privilege, so defendants are not liable unless they published from express malice. ¡Authorities on this question are meager and perhaps not harmonious. The Postmaster-General is a high official of the National Government and his acts as such are of interest to the general public. We simply say that in our judgment a fair publication, made as a matter of news or public concern and without actual malice, of what such an officer does officially and the reasons he gives for his acts, should be privileged, and we hold it is upon persuasive authorities, though we find none on either side of the question in this State. [McClure v. Pub. Co., 38 Wash. 160; Meteye v. Times Dem. Co., 47 La. 824; Wason v. Walter, L. R. 4 Q. B. 73; Connor v. Pub. Co., 183 Mass. 475; 25 Cyc. 410, and cases cited in notes.] In said treatise the rule is thus stated: “An accurate and impartial account of executive or legislative proceedings and investigations is privileged when made in good faith.” That ought to be the law, considering the widely diffused interest among the people in what great officers of the government do in their official capacity, and the beneficial influence on the conduct of public affairs of disseminating information on the subject. We do not see why the public is not entitled to be informed the Postmaster-General has issued a fraud order against some person or company and of the reason assigned for doing so, but think no one will be harmed and many perhaps helped on the whole, by publishing the facts.
The judgment is reversed and the cause remanded.
Reynolds, P. J., concurs -,-Nortoni, J., not sitting.