238 F. 459 (9th Cir. 1916), 2672, Examiner Printing Co. v. Aston

Docket Nº:2672.
Citation:238 F. 459
Case Date:December 04, 1916
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 459

238 F. 459 (9th Cir. 1916)




No. 2672.

United States Court of Appeals, Ninth Circuit.

December 4, 1916

         Garret W. McEnerney, of San Francisco, Cal. (John J. Barrett and Andrew F. Burke, both of San Francisco, Cal., of counsel), for plaintiffs in error.

         Jacob M. Blake, of San Francisco, Cal., for defendant in error.

Page 460

         For opinion below, see 226 F. 496.

         Action at law to recover damages for libel. Judgment for plaintiff. Defendants allege error.

         The Sierra Blue Lakes Water & Power Company was the owner of certain water rights on the Mokelumne river in California, which were said to be available and adequate as a source of water supply for San Francisco. In May, 1913, Eugene J. Sullivan and his wife, being the owners of practically all the issued capital stock of this company, executed their power of attorney to Richard Keatinge and his son of San Francisco by which they were empowered to make a sale of the stock at their discretion. Thereafter, these attorneys in fact gave a three months' option to Mr. W. J. Wilsey within which he might make a sale and delivery of the entire property and assets of the company. The plaintiff was employed by Mr. Wilsey as consulting civil engineer to make a survey of the company's property and to prepare notes maps, profiles, and a report of and concerning the availability of the Mokelumne river sources in the Sierra Nevada Mountains in California. This was undertaken by plaintiff, and the report completed in July, 1913. Mr. Wilsey's option expired by limitation in August, 1913, and with its expiration the plaintiff's direct interest in the property ceased.

         In March, 1913, Congress convened in special session, at which time there was presented the application of the city of San Francisco for the grant of reservoir and power privileges at Lake Eleanor, Cherry creek, and in the Hetch Hetchy Valley. This application had prior to that time been pending before the Secretary of the Interior; but, that officer having held that Congress possessed the exclusive power and jurisdiction to grant the privileges sought by the city of San Francisco, the application was transferred to that body. In making the application, San Francisco relied very strongly upon a report made by an Advisory Board of Army Engineers, appointed at the behest of the Secretary of the Interior of the United States to make an investigation of the sources of water supply available for San Francisco as a basis of determining whether or not the Hetch Hetchy privileges should be granted,

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which report showed the necessity of including these privileges in order to furnish an adequate water supply.

         The Sierra Blue Lakes Water & Power Company, through Sullivan and the plaintiff, actively opposed the Hetch Hetchy Bill, contending that the Board of Army Engineers had been deceived in its findings by the fact that the city of San Francisco, upon which had been enjoined the duty of supplying all necessary data to enable the Advisory Board of Army Engineers to make its determination, had not only been remiss in this duty, but had actually suppressed a report which, according to the claim of the plaintiff and Sullivan, proved that the Mokelumne water rights owned by the Sierra Blue Lakes Water & Power Company were ample as a source of water supply for San Francisco; and charged that the city officials had deliberately suppressed this report.

         The alleged libel (the subject of this action) was contained in a special Washington edition of the San Francisco Examiner published in the city of Washington, D.C., on December 2, 1913, when there was pending before the Senate the Hetch Hetchy bill granting to San Francisco the reservoir and power privileges mentioned. This Washington edition dealt with the water supply question in San Francisco and the needs and necessities of San Francisco in that behalf and urged the granting of the Hetch Hetchy privileges.

         One of the articles complained of, entitled 'Thief with the Nature Lovers,' was signed by Representative Kent of California, and read, in part, as follows:

         'I want to state here and now that I have read this literature put out by these people. It has only one foundation in fact and that foundation is the letters of this man Sullivan whom we proved in the hearings in the House to be a thief and a man who ought to be in the penitentiary.'

         Another was entitled 'Inspiration of Opposition,' reading as follows:

         'During the Senate Committee hearing it came out that much of the inspiration for gross and careless aspersions made on the city of San Francisco, the Army Engineers and engineers generally, came from two men named Sullivan and Aston, who had pretended to have an opposition water supply to sell to San Francisco.

         'But at the House hearing it had been so thoroughly developed that the Sullivan-Aston scheme was just a gross fraud that Mr. Johnson (a conservationist who opposed the Hetch Hetchy Bill) got very angry when Sullivan was referred to as his friend, though he admitted receiving information on which he had attacked the Hetch Hetchy project as a bad jobbery from Sullivan's man, Aston.'

         An amended complaint was filed September 3, 1914, in which it was alleged that by the use and publication of the above language defendants charged and asserted, and were by the readers of the newspaper in fact understood as charging and asserting: (1) That plaintiff was guilty of the fraudulent intent, purpose, and design to combine and conspire with Eugene J. Sullivan to perpetrate a gross fraud upon the city of San Francisco by and through the sale to it of a worthless opposition water supply, and that plaintiff pretended to have such opposition water supply to sell to the city, and that because he pretended with Sullivan to have such opposition water supply to sell to the city he was led to make gross and careless aspersions on the city of San Francisco, the Advisory Board of Army Engineers, and others; (2) that plaintiff had been proved at the hearing before the Committee on Public Lands of the House of Representatives to be guilty of combining and conspiring with Sullivan to perpetrate, and of perpetrating, a gross fraud either upon said committee, or upon the House of Representatives, or upon Congress, or upon the city of San Francisco, or upon some other persons; and (3) that plaintiff was the tool, sycophant, or hireling of Sullivan, and therefore of 'a thief' and of 'a man who ought to be in the penitentiary,' and that as such he would stultify himself and prostitute his personal honor and professional reputation to do the servile bidding of such an employer without reference to truth and right, and that he had so demeaned himself and disgraced his profession in a certain course of conduct with one Mr. Johnson (meaning Robert Underwood Johnson of New York City), by lying and misrepresenting

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facts in connection with the Hetch Hetchy project at the bidding and behest of Sullivan. It was further alleged: 'That said charges so made and published by the defendants and each of them and so understood, and by them and each of them intended to be understood by the readers of said special Washington edition of said 'San Francisco Examiner' were, and are in every particular false, misleading, defamatory, libelous, unprivileged, and without excuse, and that they had a tendency to and did and do expose plaintiff to hatred, contempt and obloquy by imputing to him the basest, meanest and most untrustworthy traits of character as a man, neighbor and citizen and most tendency to and did and do injure him in his good name, reputation, and business, occupation and profession and that said charge was published and circulated by said defendants and each of them with express malice on the part of each of said defendants, and with the design and intent on the part of each of them to outrage the feelings of plaintiff and to cause him to be shunned and avoided by his fellow citizens, and to destroy his reputation and character for honesty and integrity; and to hold him out to the people of the United States and elsewhere as being devoid of honesty and integrity and by reason of an alleged business association with a man stigmatized as a 'thief' and 'who ought to be in the penitentiary,' as being unworthy of any personal or professional trust or confidence, and to injure him in his good name, reputation, business, occupation and profession.'

         The answer of the defendant William Randolph Hearst was a general denial except as to admissions that the Examiner Printing Company was a corporation incorporated under the laws of the state of California with its principal place of business in San Francisco, and that the defendant William Randolph Hearst was a resident and citizen of the state of New York and an inhabitant of the city of New York.

         The amended answer of the defendant Examiner Printing Company was also a general denial except as to admissions similar to those contained in the answer of the defendant Hearst; and for a further answer the defendant set up matter in defense by way of justification, and also matter by way of defense in mitigation of damages in the event that the plaintiff should be held entitled to recover.

         The matter in justification was, in substance, that the plaintiff at the times mentioned in the complaint was in the employment of the said Sierra Blue Lakes Water & Power Company and had an interest in the alleged water rights owned by said company, contingent upon the sale of said water rights to the city and county of San Francisco; that there was a great disparity between the water rights claimed to be owned by the said Sierra Blue...

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