American Malting Co. v. Keitel

Decision Date20 November 1913
Docket Number155.
Citation209 F. 351
PartiesAMERICAN MALTING CO. v. KEITEL.
CourtU.S. Court of Appeals — Second Circuit

Ralph B. Ittelson, of New York City, for appellant.

O'Gorman Battle & Vandiver, of New York City (Almuth C. Vandiver Isaac H. Levy, and J. Joseph Lilly, all of New York City, of counsel), for appellee.

Before LACOMBE, WARD, and ROGERS, Circuit Judges.

ROGERS Circuit Judge.

The plaintiff seeks to restrain the defendant from issuing printed circulars alleged to contain matters which tend greatly to injure the business, credit, and property of the plaintiff. The American Malting Company is a corporation organized under the laws of the state of New Jersey. Its capital stock is $30,000,000. It does a business of from $7,000,000 to $12,000,000 a year; the amount of its business varying with the price of barley. It is said to be the largest manufacturer of malt in the United States. The defendant is a citizen and resident of the state of New York and holds no stock in the complainant company. The circulars complained of began to make their appearance in 1907 and since July, 1912, have been issued at intervals of a week. They have been mailed to brewers and consumers of malt throughout the United States, as well as to banks and to complainant's stockholders. The corporate name of the plaintiff is mentioned in only a few of the circulars. They contain references, however, to the 'gold-brick swindle,' the 'gold-brick pool,' 'trust,' 'malt combine,' which plaintiff says were intended to be understood to refer to it, and it alleges that they are so understood by the persons to whom they were sent. The defendant denies that the circulars show that the complainant was mentioned to its damage or that it can be said that the plaintiff in fact was intended. The plaintiff claims that defendant is persistently attempting maliciously to interfere with its existing contracts, is seeking maliciously to induce parties to refrain from dealing with plaintiff and to resist the payment of their debts to it, and is endeavoring maliciously to destroy its business credit and property.

The defendant was convicted of criminal libel in 1911 because of a circular dated January 6, 1910, which he issued. But that conviction is not res adjudicata as to statements made in the subsequent circulars. And we have no exact knowledge as to what the statements were in the January 6, 1910, circular which the jury found to be libelous. The subsequent circulars are unquestionably full of libels on various persons if the allegations they contain are false. They are not libelous so far as the allegations are true. The campaign he is evidently engaged in is against the combination of malters which he alleges is illegal. He charges the combination with keeping up the price of malt by false statements and artifices and with inducing brewers to contract for future delivery at unreasonable prices. He advises brewers not to buy for future delivery and those who have purchased in the season of 1911-1912 to repudiate their contracts. He charges the American Malt Corporation with trying to get the stockholders of the American Malting Company to exchange their stock by means of false representations and also perhaps that the officers of the malting company have made false statements in circulars about its financial condition. The American Malt Corporation is a separate organization distinct from the American Malting Company, and is also organized under the laws of New Jersey, and at the time of this suit held 98 per cent. of the capital stock of the American Malting Company. It is alleged that the American Malt Corporation does not own or control the stock of any other corporation.

The court below awarded a very drastic injunction pendente lite, restraining the publication of the circulars. It, however, added a clause to the effect that, if defendant would accompany each future circular with the statement that his charges were not directed against this particular plaintiff, he might continue issuing them. As one ground of his defense is that the charges are not against the plaintiff, his purpose would not be thwarted by embodying such a statement in each subsequent circular. But he appeals to this court, and it becomes necessary to consider whether the court below had jurisdiction of the subject-matter. If it had not, the preliminary injunction should be vacated and the bill dismissed. This makes it necessary to inquire what power the courts of equity possess to restrain the publication of libels.

Courts of equity like courts of law follow established precedents. They cannot usurp powers they do not possess. We recognize the fact that equity is an elastic system; that its procedure is progressive and is capable of accommodating itself to the changing emergencies and demands of the age. If it were otherwise it could not so well have met the needs of our civilization. At the same time courts are not to usurp powers they do not possess. In a country which has constitutional guaranties of freedom of speech and of the press and of trial by jury, courts of equity should be slow to assume that they possess a power to deal with the publication of libels that the High Court of Chancery in England disclaimed.

Lord Chancellor Eldon in 1818, speaking of the powers of the equity courts, said:

'The doctrines of this court ought to be as well settled and made as uniform almost as those of the common law, laying down fixed principles, but taking care that they are (not) to be applied according to the circumstances of each case. I cannot agree that the doctrines of this court are to be changed with every succeeding judge. Nothing would inflict on me greater pain, in quitting this place, than the recollection that I had done anything to justify the reproach that the equity of this court varies like the chancellor's foot. ' Gee v. Pritchard, 2 Swanton, 428.

Lord Chancellor Hardwicke in 1742 (Huggonson's Case, 2 Atk. 469) declared that:

'Notwithstanding this should be a libel, yet, unless it is a contempt of the court, I have no cognizance of it, for, whether it is a libel against the public or private persons, the only method is to proceed at law.'

It should be said, however, that in that case equity was asked to punish a past tort, not to restrain a future one. Lord Ellenborough in 1810, in a common-law court (Du Bost v. Beresford, 2 Camp. 511), said, in speaking of a picture, that, if it was a libel upon the persons introduced into it, 'upon an application to the Lord Chancellor he would have granted an injunction against its exhibition. ' But this dictum is known to have excited much astonishment in the minds of all practitioners in the court of chancery. Thus matters stood in England until 1869, when Vice Chancellor Malins granted injunctions against libels. Springhead Spinning Co. v. Riley, L.R. 6 Eq. 551; Dixon v. Holden, L.R. 13 Eq. 355. These decisions were, however, speedily overruled in 1875 in Prudential Assurance Co. v. Knotts, L.R. 10 Ch.App. 142. In Collard v. Marshall (1892) 1 Ch. 571, Chitty, J., said that, before the Judiciary Act, equity had no power to try a libel. In Monson v. Tussands Limited (1894) 12 B. 671, Lopes, L.J., said:

'Prior to the Common-Law Procedure Act 1854, no court could grant any injunction in a case of libel. The Court of Chancery could grant no injunction in such a case, because it could not try a libel. Neither could courts of common law until the Common-Law Procedure Act of 1854, because they had no power to grant injunctions. Whether they had power to grant interlocutory injunctions after 1854, I think doubtful. As a matter of practice they never did.'

The Common-Law Procedure Act of 1854 conferred on the English courts of common law the power to grant injunctions in all personal actions of contract or tort, with no limitation as to defamation. And by the Judicature Act of 1873 a power was conferred upon the Chancery Division of the High Court to grant injunctions in cases of libel. But prior to these acts neither courts of law nor courts of equity could issue injunctions in England in such cases. The English law courts began to exercise such jurisdiction in 1878, and about the same time the equity courts began in like manner to exercise theirs. But it is understood that they interfere only in the 'clearest cases,' and especially by interlocutory injunctions. See Bonnard v. Perryman (1891) Ch. 269 (C.A.); Kerr on Injunctions, 5, 6. For 150 years it has been understood in England that equity had no jurisdiction to enjoin a libel, and the power of the courts of that country to do so rests upon statute.

In the United States a like view of the matter has been taken. In Pomeroy's Equity Jurisprudence, vol. 6, Sec. 629, it is laid down that:

'Equity will not restrain by injunction the threatened publication of a libel, as such, however great the injury to property may be. This is the universal rule in the United States and was formerly the rule in England. The present rule in England rests on statute.'

In High on Injunctions (4th Ed.) Sec. 1015, that writer states that the doctrine which seems most in accord with the principles governing the jurisdiction of equity by way of injunction is that, the preventive jurisdiction being limited to the protection of property rights which are remediless by the usual course of procedure at law, courts of equity will not restrain the publication of libels or works of a libelous nature, even though such publications are calculated to injure the credit, business, or character of the person aggrieved, and that he will be left to pursue his remedy at law. In a case in the Supreme Court of the United States (1885), Francis v. Flynn, 118 U.S. 385, 56 Sup.Ct 1148, 30 L.Ed. 165, Mr....

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