Petition of Retailers Commercial Agency, Inc.

• Decision Date: 01 May 1961
• Citation: 342 Mass. 515,174 N.E.2d 376
• Parties: Petition of RETAILERS COMMERCIAL AGENCY, INC. George I. SHORE v. RETAILERS COMMERCIAL AGENCY, INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 376

174 N.E.2d 376

342 Mass. 515

Petition of RETAILERS COMMERCIAL AGENCY, INC. George I. SHORE v. RETAILERS COMMERCIAL AGENCY, INC.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 4, 1961.

Decided May 1, 1961.

Claude R. Branch, Boston (Daniel F. Featherston, Jr., Boston, with him), for Retailers Commercial Agency, Inc.

Paul R. Sugarman, Dorchester (Haskell A. Lampke, Boston, with him), for Shore.

Before WILKINS, C. J., and SPALDING, WILLIAMS, WHITTEMORE and CUTTER, JJ.

SPALDING, Justice.

I.

Petition to Establish the Truth of Exceptions.

This is a petition to establish the truth of exceptions alleged to have been taken by the defendant in the case of Shore v. Retailers Commercial Agency, Inc. G.L. c. 231, § 117. The petition was referred to a commissioner who reported that the exceptions set forth in the bill were 'conformable to the truth.' This conclusion is not challenged. The only issue that need concern us is whether the exceptions have been 'reduced to writing in a summary manner' as required by G.L. c. 231, § 113. See Western Union Telegraph Co. v. Fitchburg Gas & Electric Light Co., 334 Mass. 587, 593, 137 N.E.2d 459. The transcript of 323 pages has been reduced in the bill to twenty-seven pages, about six of which are in question and answer form. Perhaps further condensation would have been possible but the recitals in question and answer form were not, in the circumstances, excessive and, as the commissioner found, a reduction of such testimony to narrative form would not have materially shortened the bill. We are of opinion that there has been substantial compliance with the 'summary manner' requirement of the statute. The exceptions, therefore, are established. See Clemens Electrical Mfg. Co. v. Walton, 173 Mass. 286, 295-296, 52 N.E. 132, 53 N.E. 820; Conrad v. Mazman, 287 Mass. 229, 237-238, 191 N.E. 765; Zacharer v. Town of Wakefield, 291 Mass. 90, 92-93, 195 N.E. 893. Compare Graustein, petitioner, 305 Mass. 568, 569, 26 N.E.2d 535; Rines, petitioner, 331 Mass. 714, 719-720, 122 N.E.2d 364.

II.

The Merits.

This is an action of tort for libel arising out of a credit report made by the Retailers Commercial Agency, Inc. (defendant), to Modern Funding Corporation (Modern). At a jury waived trial the judge found for the plaintiff in the amount of $10,000.

There was evidence of the following. In March, 1956, the plaintiff, doing business under the name of the Mortgage Service Bureau, got in touch with one Vogel to see if Modern would use the plaintiff's services as a mortgage broker. The plaintiff would submit mortgages to Modern and, if they were approved, Modern would supply funds for the mortgages and pay him a commission. Vogel, as the local manager of Modern, a New York corporation, ¹ had the duty of receiving and processing applications for mortgages, of passing on the value of property and the financial responsibility of applicants, and of servicing the mortgages. He received authorization from Rothman, the president of Modern, to do business with the plaintiff.

During 1956, there was an agreement in effect, between Modern and the defendant, in which the defendant undertook to make credit reports on request. Sometime prior to August, 1956, Vogel asked Nolan, a manager of the defendant, to make a report on the plaintiff. Early in August, Vogel received such a report, dated August 1, 1956, which stated that the plaintiff's net worth was $15,000; that his annual earned income was $7,500; that he had failed in business or had been through bankruptcy; that a Waltham bank reported that he had had a small loan which was an 'undesirable account'; that '[e]xtreme caution should be used * * * in dealing with * * * [him]' as there had been '48 inquires [concerning the plaintiff] in six mos. time,' and '116 special inquiries * * * due to unethical business practices,' when he was in the real estate business; that he had been arrested and charged with 'debt pooling, larceny of over $100,' and with 'being a common and notorious thief'; and that he had 'pleaded innocent' to a complaint of larceny of over $100. Upon receiving this report, Vogel communicated with the plaintiff and disclosed its contents. Vogel knew that 'the whole subject was confidential * * * because * * * there was the legend 'confidential' printed right on the report.' He did not, however, specifically know that he was not supposed to divulge the contents of the report to the person inquired about.

Subsequently, the plaintiff satisfied Vogel that the report was untrue and inaccurate in several respects, and Vogel continued to do business with him. Vogel told the plaintiff that the report would not be shown to Rothman because 'that would be the end of any possible deal that we'd ever have, as between * * * Rothman, Modern * * * and [Vogel].' Vogel did, however, point out to the defendant's manager, Nolan, those items which the plaintiff contended were erroneous, and in the middle of September, 1956, the defendant supplied a second report which differed in several material respects from the first. In it the plaintiff's net worth was reported as $100,000-$150,000, instead of $15,000; his income was raised from $7,500 to $35,000-$40,000; the reference to the 'undesirable' loan account was deleted, as were the warning to use extreme caution in dealing with him and the reference to inquiries due to unethical business practices. The plaintiff's court record was changed to indicate that the plaintiff pleaded nolo contendere to a larceny indictment, which was dismissed, the plaintiff agreeing 'to make restitution of $448.' At the bottom of the report was written 'See report dated 8-1-56.'

Subsequently Vogel went to New York and showed Rothman the second report; and upon seeing the reference to the first report, Rothman asked to see it. Vogel was then instructed to cease doing business with the plaintiff, but contrary to these instructions he put through several more applicants prior to February 1, 1957, when he stopped working for Modern.

The declaration alleged that the defendant falsely and maliciously published defamatory information about the plaintiff in the first (August 1) report, the substance of which has already been set forth. The defendant does not contend that this report could not have been found to be defamatory. Rather it argues that the report was conditionally privileged, and that no abuse has been shown. Hitherto this court has never decided whether a report made by a mercantile agency in the circumstances existing here was qualifiedly privileged. There is, to be sure, a statement in the case of Colby Haberdashers, Inc. v. Bradstreet Co., 267 Mass. 166, 169, 166 N.E. 550, to the effect that such a report was privileged; but that statement was not necessary to the decision and was dictum. By the great weight of authority a report made by a mercantile agency to a particular subscriber whose business interest is involved is conditionally privileged. ² The rule is otherwise in England and in a few States. ³

We are of opinion that reports made by a mercantile agency to an interested subscriber should be conditionally privileged. Those about to engage in a commercial transaction like to know something about the persons with whom they are dealing. Often they are unable to get that information themselves and must obtain it through mercantile agencies. In furnishing such information the agencies are supplying a legitimate business need and ought to have the protection of the privilege. Without such protection few would undertake to furnish the information, and the cost would be high, if not prohibitive. For a good discussion of the reasons supporting the privilege see Smith, Conditional Privilege for Mercantile Agencies, 14 Col.L.Rev. 187, 296, 306-310. We are not to be understood as holding that there is a privilege where information is published by the agency generally to subscribers having no particular interest in the report. See King v. Patterson, 49 N.J.L. 417, 9 A. 705; Sunderlin v. Bradstreet, 46 N.Y. 188, 192-193; Hanschke v. Merchants' Credit Bureau, 256 Mich. 272, 239 N.W. 318; Mitchell v. Bradstreet Co., 116 Mo. 226, 239, 22 S.W. 358, 724, 20 L.R.A. 138; Prosser, Torts (2d ed.) p. 617; Restatement: Torts, § 595, comment g.

A conditional privilege is destroyed if abused. On this issue the burden is on the plaintiff. Bander v. Metropolitan Life Ins. Co., 313 Mass. 337, 344, 47 N.E.2d 595; Galvin v. New York, N. H. & H. R. R., Mass., 168 N.E.2d 262. ⁴ The defendant contends that the privilege could only be abused by actual or express malice, and having failed to present any evidence of such malice, the plaintiff cannot recover. Thus, it argues, the judge erred in denying the defendant's thirteenth request that a finding for the defendant was required. It is well established that proof of actual or express malice will destroy a qualified privilege. See Galvin v. New York, N. H. & H. R. R., supra, 168 N.E.2d at page 265,4 and cases cited. If such malice were to be required here, the defendant's request should have been granted, for there was no evidence that would warrant a finding of actual or express malice. But, as noted in the Galvin case, there may be an abuse of a qualified privilege even though no actual malice or ill will is shown. In that case it was held that a conditional privilege can be abused by an 'unnecessary, unreasonable or excessive publication of the defamatory matter.' 168 N.E.2d 266. ⁵ Although there is no contention here that the publication was excessive, the plaintiff argues that an abuse can be shown in other ways not amounting to ill will.

It has long been recognized that an absence of good faith may tend to prove ill will and thus actual malice. See Billings v. Fairbanks, 139 Mass. 66, 69, 29 N.E. 544; Christopher v. Akin, 214 Mass. 332, 334, 101 N.E. 971, 46 L.R.A.,N.S., 104; Wormwood v. Lee, 226 Mass. 339, 341, 115 N.E. 494; Childs v. Erhard, 226 Mass....