Dun & Bradstreet, Inc. v. Nicklaus

• Decision Date: 03 February 1965
• Docket Number: No. 17421.,17421.
• Parties: DUN & BRADSTREET, INC., Appellant, v. G. C. NICKLAUS, Trustee in Bankruptcy for Fordyce Wood Products, Inc., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

340 F.2d 882 (1965)

DUN & BRADSTREET, INC., Appellant, v. G. C. NICKLAUS, Trustee in Bankruptcy for Fordyce Wood Products, Inc., Appellee.

No. 17421.

United States Court of Appeals Eighth Circuit.

February 3, 1965.

Robert V. Light, Little Rock, Ark., made argument for appellant and filed brief.

Henry W. Gregory, Jr., Pine Bluff, Ark., made argument for appellee and filed brief with H. Murray Claycomb, Pine Bluff, Ark.

Before VOGEL and MATTHES, Circuit Judges, and HARPER, District Judge.

HARPER, District Judge:

This is an appeal in a libel action where trial to a jury resulted in a verdict against defendant (appellant) for $40,000.00 actual damages and $10,000.00 punitive damages.

Appellant (also referred to as Dun & Bradstreet or defendant) is a mercantile agency which gathers, evaluates and disseminates to its subscribers confidential credit information. Fordyce Wood Products, Inc. (also referred to as Fordyce or plaintiff) was engaged in the business of manufacturing various wood products in Fordyce, Arkansas, and from 1955 until the time of trial of this cause in December, 1962, was under the management of John H. Stucker, an experienced woodworking manufacturer. In early 1963, plaintiff was adjudged a bankrupt; thereafter, the trustee was substituted as appellee.

A Notice of Tax Lien (26 U.S.C.A. § 6321) was filed on November 28, 1960, on behalf of the United States against plaintiff in the office of the Circuit Clerk and Recorder of Dallas County, Arkansas, for delinquent taxes withheld by plaintiff from wages paid to its employees for the second quarter of 1960, and penalty for late payment for the first quarter.

On November 29, 1960, Mrs. Morgan, a "record item correspondent" for Dun & Bradstreet in Dallas County, examined the lien records and completed a printed form to report the filing of the lien. While Mrs. Morgan was in the Circuit Clerk's office on November 29th she overheard a deputy clerk say that Mr. Bradley, who had filed the Notice of Tax Lien, had remarked that he was going to the bank and file it. Mrs. Morgan sent her report to the Dun & Bradstreet office in Little Rock, where the following report was prepared and sent to fifty-one Dun & Bradstreet subscribers who had previously requested information regarding Fordyce:

"FOLLOWING INFORMATION TAKEN FROM LIEN RECORDS —

"Suit styled U.S.A. vs. Fordyce Wood Products, Inc., filed Nov. 28, 1960, cause of action, withhold tax for 1st and 2nd quarter of 1960. Lien filed; also, lien filed on bank account of subject by U.S.A. 12-6-60."

Initial distribution of this report was on December 6, 1960.

On March 6, 1961, plaintiff became aware that this report had been published. This resulted in the publication of the following report on March 6, 1961, which was distributed to forty-eight of the fifty-one subscribers who had received the first report, as follows:

"Further investigation reveals tax lien filed by U.S.A. vs. Fordyce Wood Products, Inc., on Nov. 28, 1960, was satisfied and released of record, Dec. 1, 1960. It is further understood that lien on bank account has also been satisfied."

The lien was satisfied of record on December 1, 1960. On December 5, 1961, Fordyce filed this suit against Dun & Bradstreet alleging that these two reports were false and defamatory, had been published by defendant with malice, and had caused plaintiff to sustain actual damages. Punitive damages were also sought. Trial to a jury resulted in a verdict against defendant for $40,000.00 actual damages and $10,000.00 punitive damages. Defendant contends that the verdict should be reversed and dismissed, or in the alternative, reversed and remanded for new trial.

The appellant complains that the court committed error in instructing the jury that the reports were false as a matter of law. Instructions must be considered as a whole. The court instructed the jury in part as follows:

"* * * Before the plaintiff can recover anything in this action it must prove by a preponderance of the evidence: First, that one or both of the reports or statements * * * referred to in the evidence was or were false. Second, that such statement or statements was or were defamatory. And, third, that such statement or statements was or were a proximate cause of damage to the plaintiff. Unless you so find all of those three things, your verdict must be for the defendant. * * *

"Taking up first the element of falsity, although the defendant contends that the statements or reports in question were substantially true, the court now tells you as a matter of law that the statements were in fact false, and that you may consider that the first element of plaintiff\'s claim has been established as a matter of law."

The defendant contends that the giving of the preceding paragraph was error. The defendant properly objected to this part of the instruction at the time of the trial. In order to properly determine whether such was error, it is necessary that the entire charge be examined, and it is pertinent that we set out a part of the charge which immediately followed that part of which the appellant complains:

"I think that I should tell you in this connection that the falsity of the report of December 6 lay in the fact that it advised its recipients that a suit had been filed by the United States against plaintiff, that a federal tax lien had been filed against plaintiff, and, further, that an additional lien had been filed against plaintiff\'s bank account. Now, while it is true that on November 28, 1960, the Government filed a notice of an internal revenue tax lien against plaintiff with the Circuit Clerk of Dallas County, Arkansas, there was never any suit filed against the plaintiff by the Government, and there was never any specific lien filed against the bank account, although, of course, the general notice of lien affected the bank account as well as plaintiff\'s other assets.

"The second statement was false in that it referred again to a specific lien against the bank account whereas there was never any such specific lien.

"Of course, the mere fact that the statements were false is not alone sufficient to justify you in returning a verdict for the plaintiff. As I have stated, you must further find that the statements, or at least one of them, was or were defamatory, and that the falsity and the defamatory nature, if any, of the statement or statements was a proximate cause of damage to the plaintiff; and the burden is on the plaintiff to establish the defamatory nature of the statements and damage resulting therefrom by a preponderance of the evidence."

While the trial court instructed the jury that the reports were false as a matter of law, the instruction in the next two paragraphs clearly points out to the jury why the reports were false, and further points out that that part of the reports regarding the filing of an internal revenue tax lien against plaintiff with the Circuit Clerk of Dallas County, Arkansas, was true.

The jury was immediately thereafter told that the mere fact the statements were false was not alone sufficient to justify their returning a verdict for the plaintiff, but the plaintiff had to further prove by the preponderance of the evidence that the statements, or at least one of them, were defamatory and that the falsity and the defamatory nature of the statement or statements was the proximate cause of damage to the plaintiff to recover.

The court did not need to present the question of falsity of the reports to the jury since there were no fact questions for the jury to consider. The court properly instructed the jury that the false parts of the...