Ashcroft v. Hammond

• Decision Date: 15 February 1910
• Citation: 197 N.Y. 488,90 N.E. 1117
• Parties: ASHCROFT v. HAMMOND.
• Court: New York Court of Appeals Court of Appeals

197 N.Y. 488

90 N.E. 1117

ASHCROFT

v.HAMMOND.

Court of Appeals of New York.

Feb. 15, 1910.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Ralph W. Ashcroft against John Hays Hammond. A judgment of nonsuit was reversed by the Appellate Division (132 App. Div. 3,116 N. Y. Supp. 362), and defendant appeals. Order of the Appellate Division reversed, and the judgment of the Trial Term affirmed.James Byrne, for appellant.

R. A. Mansfield Hobbs, for respondent.

CULLEN, C. J.

The action is for libel. The publication complained of is a telegram sent from the defendant to Samuel L. Clemens in negotiations to settle a controversy that had arisen over the affairs of the Plasmon Company. Plasmon is a product of milk obtained by processes protected by patents. The parent company was an English corporation. The Plasmon Company of America was capitalized at 7,500 shares of stock at the par value of $100. The English company held 2,500 shares issued in consideration of the patent rights for this country transferred to the American company; the defendant, 1,250 shares; his wife, [197 N.Y. 491]229 shares; Clemens, 400 shares; and the plaintiff 10 shares, besides whom there were other stockholders. The rights obtained from the English company were first held by what is termed the Plasmon Syndicate, the members of which, in the spring of 1902, formed the Plasmon Company. The company and its predecessor, the syndicate, seem to have been unfortunate from the beginning. The first manager, a Dr. Cook, left the syndicate in December, 1901, under charges of dishonesty. He was succeeded by one Wright, who became general manager of the company on its incorporation. The plaintiff became assistant manager in June, 1902; secretary and treasurer in December, 1902; manager in May, 1903; auditor, March, 1904; and manager again in June, 1904. In May, 1903, Wright left the service of the company also under charges of dishonesty and of fraudulent issue of stock. In August, 1904, the company became practically insolvent. To aid it, the defendant loaned it the sum of $10,000, to be repaid in 30 days, and took as security therefor a mortgage on all its property and assets. The mortgage was not authorized or ratified by the stockholders. The condition of the company did not improve. As is usual, lack of success bred dissension. The English company, the largest stockholder in the American company, protested against the mortgage. The defendant proposed a plan to reorganize the company and put in additional capital. That plan did not meet the approval of the other stockholders, and the controversy became acute. Finally, at a stockholders' meeting, on September 1, 1904, a new board of directors was elected. One Wheeler, who had previously been vice president of the company and represented the defendant's interest therein, refused to recognize the election as legal because a majority of the stock was not voted thereat. He sought to retain possession of the offices of the company. Litigation followed both in the state and federal courts, where the validity of the election was upheld. The plaintiff was elected general manager by the new board and immediately thereafter sent these telegrams to the defendant and his secretary:

‘New York, Sept. 1st, 1904, via Gloucester, Ms., Sept. 1st. John Hays Hammond, Care Eastern Yacht Club Stn, Bar Harbor, Me.: At to-day's adjourned annual meeting of Plasmon Company an entirely new board was elected and Wheeler was thereby put out of office; we desire to repay your loan immediately. Please wire Truslow at once accordingly. Plasmon Co. of America, R. W. Ashcroft, Manager.’

‘New York, N. Y., Sept. 1st, 1904, via Gloucester, Mass., Sept. 1st, 1904. John Hays Hammond, Care Eastern Yacht Club, stn, Bar Harbor, Me.: Strongly advise you to instruct Wheeler not to resist the new Plasmon Board, otherwise you will antagonize interests whose hostility you and your Guggenheim associates can least of all afford to incur. Will explain to Campbell, to-morrow.

‘R. W. Ashcroft.’ ‘James Douglas Campbell, c/o John Hays Hammond, 71 Broadway, City of New York: Not hearing from Hammond I wish to inform you, his private secretary, that unless Wheeler immediately quits his arbitrary and illegal acts regarding Plasmon matter, Hammond and his Guggenheim associates will incur the active hostility of people whose antagonism would result in great financial loss to Guggenheim. I, therefore, strongly urge you to get into touch with Hammond at once and induce him to order Wheeler to quit fighting over a dry bone. I will pay Hammond loan Tuesday.

‘R. W. Ashcroft.’

Mr. Clemens in the controversy sided with Ashcroft, who testified he was Clemens' representative. Conferences took place between Mr. Clemens and the defendant, but without result. On September 15th, the plaintiff and Mr. Clemens called at the defendant's hotel for further conference, but found him out of town. Thereupon the following telegram was sent:

‘New York, Sept. 15, 1904. John Hays Hammond: Broughton suggests Truslow should act as your attorney and proxy in Plasmon matter. We cannot accept Davis, or any one else as permanent manager, but will guarantee to protect your 22% interest on terms stipulated by you. Papers covering Truslow's appointment mailed you special delivery to-night. Please return them to me at Hotel Walcott. Please wire Wheeler instructing him to vacate Plasmon offices forthwith; withdraw his policemen, recognize new board and release bank account. Also wire Truslow to relinquish deed of trust and other documents on payment of your loan by us. Telegraph reply Hotel Walcott.

S. L. Clemens.'

To this the defendant answered on the same day:

‘Gloucester, Mass., Sept. 15, 1904. S. L. Clemens, Hotel Walcott, New York: I shall strongly oppose turning over company to Ashcroft's board of directors. He has been identified with the rotten administration of Cook and Wright, and is incompetent or worse. Unless Davis accepts management and my stipulation that Ashcroft should not be employed by company, I shall retain Wheeler for the present. You have been imposed upon by Ashcroft and others regarding Wheeler. Am going to St. Louis to-morrow to be absent ten days. On my return I will discuss matters further with you and others interested. Meanwhile will extend date payment my notes.

‘John Hays Hammond.’

It is this telegram that the plaintiff charged to be libelous. The trial court held the communication privileged and dismissed the complaint. The Appellate Division reversed the judgment on that decision, and ordered a new trial, from which the defendant has appealed to this court.

That presumptively the defendant's telegram was privileged is entirely clear, and the question was one for determination by the court where the circumstances were not in dispute. Lovell Co. v. Houghton, 116 N. Y. 520, 22 N. E. 1066,6 L. R. A. 363. The definition of a privileged communication given by Judge Folger in Klinck v. Colby, 46 N. Y. 427, 433 (7 Am. Rep. 360), and reiterated in all the decisions on the subject since is: ‘When a communication is fairly made by a person in the discharge of some private or public duty, legal or moral, or in the conduct of his own affairs, in matters where his interest is concerned.’ The learned judge further said: ‘A written communication between private persons concerning their own affairs is prima facie privileged. And though all that is said is under mistake, yet the words are not, for that reason alone, actionable. Where both the party making and the party receiving the communication have an interest in it, it has never been doubted that it was privileged.’ The same judge said in Hamilton v. Eno, 81 N. Y. 116: ‘The occasion that makes a communication privileged is when one has an interest in a matter, or a duty in regard to it, or there is a propriety in utterance, and he makes a statement in good faith to another who has a like interest or duty, or to whom a like propriety attaches to hear the utterance.’ Page 124. Both the defendant and Mr. Clemens were vitally interested in the proper management of the company and in the settlement of the controversy that had arisen as to the validity of the election of the new board of directors. They were its largest individual stockholders and their interests were identical-that is to say, they were equally interested in the...