144 So.2d 25 (Ala. 1962), 3 Div. 961, New York Times Co. v. Sullivan

Docket Nº:3 Div. 961.
Citation:144 So.2d 25, 273 Ala. 656
Opinion Judge:HARWOOD, Justice.
Party Name:The NEW YORK TIMES COMPANY et al. v. L. B. SULLIVAN.
Attorney:Chas. S. Conley and Vernon Z. Crawford, Montgomery, for individual appellants. R. E. Steiner, III, Sam Rice Baker, M. R. Nachman, Jr., Steiner, Crum & Baker and Calvin M. Whitesell, Montgomery, for appellee.
Case Date:August 30, 1962
Court:Supreme Court of Alabama
 
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144 So.2d 25 (Ala. 1962)

273 Ala. 656

The NEW YORK TIMES COMPANY et al.

v.

L. B. SULLIVAN.

3 Div. 961.

Supreme Court of Alabama.

August 30, 1962

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[273 Ala. 659] T. Eric Embry, Beddow, Embry & Beddow and Fred Blanton, Birmingham, and Lord, Day & Lord and Herbert Wechsler, New York City, for appellant New York Times.

[273 Ala. 662] Chas. S. Conley and Vernon Z. Crawford, Montgomery, for individual appellants.

R. E. Steiner, III, Sam Rice Baker, M. R. Nachman, Jr., Steiner, Crum & Baker and Calvin M. Whitesell, Montgomery, for appellee.

[273 Ala. 664] HARWOOD, Justice.

This is an appeal from a judgment in the amount of $500,000.00 awarded as damages[273 Ala. 665] in a libel suit. The plaintiff below

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was L. B. Sullivan, a member of the Board of Commissioners of the City of Montgomery, where he served as Police Commissioner. The defendants below were The New York Times, a corporation, and four individuals, Ralph D. Abernathy, Fred L. Shuttlesworth, S. S. Seay, Sr., and J. E. Lowery.

Service of the complaint upon The New York Times was by personal service upon Dan McKee as an agent of the defendant, and also by publication pursuant to the provisions of Sec. 199(1) of Tit. 7, Code of Alabama 1940.

The Times moved to quash service upon it upon the grounds that McKee was not its agent, and The Times, a foreign corporation, was not doing business in Alabama, and that service under Sec. 199(1) was improper, and to sustain either of the services upon it would be unconstitutional.

After hearing upon the motion to quash, the lower court denied such motion.

In this connection the plaintiff presented evidence tending to show The Times gathers news from national press services, from its staff correspondents, and from string correspondents, sometimes called 'stringers.'

The Times maintained a staff correspondent in Atlanta, Claude Sitton, who covered eleven southern states, including Alabama.

During the period from 1956 through April 1960, regular staff correspondents of The Times spent 153 days in Alabama to gather news articles for submission to The Times. Forty-nine staff news articles so gathered were introduced in evidence.

Sitton himself was assigned to cover in Alabama, at various times, the so-called 'demonstrations,' the hearings of the Civil Rights Commission in Montgomery, and proceedings in the United States District Court in Montgomery. During his work in Alabama, he also conducted investigations and interviews in such places as Clayton and Union Springs. On some of his visits to Alabama, Sitton would stay as long as a week or ten days.

In May of 1960, he came to Alabama for the purpose of covering the Martin Luther King trial. After his arrival in Montgomery, he 'understood' an attempt would be made to serve him. He contacted Mr. Roderick McLeod, Jr., an attorney representing The Times, and was advised to leave Alabama. Shortly after this he called McKee, the 'stringer' in Montgomery, and talked generally about the King trial with him.

In addition, The Times made an active effort to keep a resident 'stringer' in Montgomery at all times, and as a matter of policy wanted to have three 'stringers' in Alabama at all times.

The work of 'stringers' was outlined by Sitton as follows: 'When The Times feels there is a news story of note going on in an area where a particular stringer lives, * * * The Times calls on a stringer for a story.'

'Stringers' fill out blank cards required by The Times, which refer to them as 'our correspondents.' Detailed instructions are also given to 'stringers' by The Times.

'Stringers' also on occasions initiate stories to The Times by telephone recordation. If these stories were not accepted, The Times pays the telephone tolls.

A 'stringer' is usually employed by another newspaper, or news agency and is called upon for stories occasionally, or offers stories upon his own. A 'stringer' is paid at about the rate of a penny a word. No deductions are made from these payments for such things as income tax, social security, insurance contributions, etc., and 'stringers' are not carried on the payroll of The Times. Up to July 26 for the year 1960, The Times had paid Chadwick, the 'stringer' in Birmingham, $135.00 for stories accepted, and paid McKee $90.00.

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[273 Ala. 666] It further appears that upon receipt of a letter from the plaintiff Sullivan demanding a retraction and apology for the statements appearing in the advertisement, which is the basis of this suit, the general counsel of The Times in New York requested the Assistant Managing Editor of The Times to have an investigation made of the correctness of the facts set forth in the advertisement in question. The Times thereupon communicated with McKee and asked for a report. After his investigation, McKee sent a lengthy wire to The Times setting forth facts which demonstrated with clarity the utter falsity of the allegations contained in the advertisement. McKee was also paid $25.00 by The Times for help given Harrison Salisbury, a staff correspondent of The Times when he was in Alabama on an assignment in the spring of 1960.

The Times also has a news service and sells to other papers stories sent it by its staff correspondents, 'stringers,' and local reporters. In this connection the lower court observed:

'

Advertising

About three quarters of the revenue of The Times comes from advertisements. In 1956, The New York Times Sales, Inc., was set up. This is a wholly owned subsidiary of The Times and its sole function is to solicit advertising for The Times only.

All of the officials of 'Sales' are also officials of The Times.

Two solicitors for 'Sales,' as well as two employees of The Times have at various times come into Alabama seeking advertising for The Times. Between July 1959 and June 3, 1960, one representative spent over a week in this State, another spent a week and a third spent three days. Advertising business was solicited in Birmingham, Montgomery, Mobile, and Selma. Between January 1, 1960 and May 1960, inclusive, approximately seventeen to eighteen thousand dollars worth of advertising was thus sold in Alabama, while in the period of 1956 through April 1960, revenues of $26,801.64 were realized by The Times from Alabama advertisers.

Circulation

The Times sends about 390 daily, and 2,500 Sunday editions into Alabama.

Shipments are made by mail, rail, and air, with transportation charges being prepaid by The Times. Dealers are charged for the papers.

Credit is given for unsold papers and any loss in transit is paid by The Times.

Claims for losses are handled by baggagemen in Alabama, and The Times furnishes claim cards to dealers who bring them to the baggagemen, The Times paying for losses or incomplete copies upon substantiation by the local Alabama baggagemen.

Account cards of various Alabama Times dealers show that credit was thus given for unsold merchandise.

We are here confronted with the question of in personam jurisdiction acquired by service upon an alleged representative of a foreign corporation.

The severe limitations of the doctrine of Bank of Augusta v. Earle (1839) 13 Pet. 519, 13 U.S. 519, 10 L.Ed.2d 274, that a corporation 'must dwell in the place of its creation, and cannot migrate to another sovereignty.' proving unsatisfactory, the courts, by resort to fictions of 'presence,' 'consent,' and 'doing business,' attempted

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[273 Ala. 667] to find answers compatible with social and economic needs. Until comparatively recent years these bases of jurisdictions have tended only to confuse rather than clarify, leading the late Judge Learned Hand to remark that it was impossible to determine any established rule, but that 'we must step from tuft to tuft across the morass.' Hutchinson v. Chase and Cilbert, (2 Cir.) 45 F.2d 139.

In Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565, the court held that the Fourteenth Amendment to the Federal Constitution required a relationship between the State and the person upon whom the State seeks to exercise personal jurisdiction, and there must be a reasonable notification to the person upon whom the State seeks to exercise its jurisdiction. The required relationship between the State and the person was held to be presence within the State, and as a corollary, no state could 'extend its process beyond that territory so as to subject either persons or property to its decisions.'

In Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927), the United States Supreme Court sustained the validity of a non-resident motorist statute which provided that the mere act of driving an automobile in a state should be deemed an appointment of a named state official as agent to receive service in a suit arising out of the operation of the motor vehicle on the highway of such state. The dangerous nature of a motor vehicle was deemed to justify the statute as a reasonable exercise of police power to preserve the safety of the citizens of the state, and the consent for service exacted by the State for use of its highways was reasonable.

In 1935 the same reasoning was applied in upholding a state statute permitting service on an agent of a non-resident individual engaged in the sale of corporate securities in the state in claims arising out of such business. Henry L. Doherty and Co. v. Goodman, 294 U.S. 623, 55 S.Ct. 553, 79 L.Ed. 1097.

Corporations being mere legal entities and incapable of having physical presence as such in a foreign state, and its agents being limited by the scope of their employment, neither the 'presence' theory nor the 'consent' theory could satisfactorily be applied as a basis for personal jurisdiction.

As to personal jurisdiction over non-resident corporations, the rule therefore evolved that such jurisdiction could be based upon the act of such corporations...

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