Brewer v. American Nat. Ins. Co., 79-3209

• Citation: 636 F.2d 150
• Decision Date: 16 December 1980
• Docket Number: No. 79-3209,79-3209
• Parties: Phinus BREWER, Plaintiff-Appellant, v. AMERICAN NATIONAL INSURANCE COMPANY, Richard A. Cohen and E. E. "Johnny" Johnson, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 150

636 F.2d 150

Phinus BREWER, Plaintiff-Appellant, v. AMERICAN NATIONAL INSURANCE COMPANY, Richard A. Cohen and E.

E. "Johnny" Johnson, Defendants-Appellees.

No. 79-3209.

United States Court of Appeals, Sixth Circuit.

Argued Oct. 16, 1980.

Decided Dec. 16, 1980.

Larry D. Raikes, Hodgenville, Ky., for plaintiff-appellant.

John P. Sandidge, Woodward, Hobson & Fulton, Richard H. C. Clay, Louisville, Ky., for defendants-appellees.

Before KEITH, KENNEDY and JONES, Circuit Judges.

CORNELIA G. KENNEDY, Circuit Judge.

Plaintiff-appellant appeals from a directed verdict for defendants-appellees in this action for slander. Brewer held a general agency contract with appellee, American National Insurance Company, covering certain counties in Kentucky. His area was under the supervision of American National employee, Richard A. Cohen, who in turn was supervised by E. E. "Johnny" Johnson. Brewer sued Cohen, Johnson, and American National charging that Cohen made false and defamatory statements to Johnson about the manner in which Brewer conducted his agency, which caused Johnson to terminate the agency contract. A jury trial commenced. At the close of appellant's case, the District Court directed a verdict for Johnson as there was no evidence Johnson made any false or defamatory statements. At the close of appellees' evidence, the District Court directed a verdict as to Cohen and American National, ruling that there was no publication when statements were made by one corporate employee to another corporate employee regarding the corporation's business.

A number of jurisdictions hold that a statement made by one corporate or business associate to another concerning the functions of the business is not a publication. See, e. g., United States Steel Corp. v. Darby, 516 F.2d 961, 964 (5th Cir. 1975) (memorandum by corporate employees circulated only to corporate employees or subsidiary concerning customer of corporation not a publication); Biggs v. Atlantic Coast Line R. R. Co., 66 F.2d 87 (5th Cir. 1933) (letter communicated only to officers of the corporation, assistant general manager to general manager and superintendent, written in the course of business, is not a publication); Jackson v. Douglas County Electric Membership Corp., 150 Ga.App. 523, 258 S.E.2d 152, cert. denied, Ga.S.Ct. (1979) (exhibition of letter concerning plaintiff's account to corporate employee who supervised customer accounts is not a publication); LuAllen v. Home Mission Board of Southern Baptist Convention, 125 Ga.App. 456, 188 S.E.2d 138 (1972) (no publication where report of plaintiff's performance only sent to those other employees whose duties included supervising plaintiff); Ellis v. Jewish Hospital of St. Louis, 581 S.W.2d 850 (Mo.App.1979) (no publication by including in the plaintiff's personnel file an evaluation or by disclosing evaluation to supervisory personnel); Magnolia Petroleum Co. v. Davidson, 194 Okl. 115, 148 P.2d 468, 471 (1944) (no publication when one employee had a duty to investigate and told another employee the results of his investigation). But see Land v. Delta Airlines, Inc., 147 Ga.App. 738, 250 S.E.2d 188, 189 (1978) (memorandum from plaintiff's supervisor to his superiors was conditionally privileged; no evidence of malice).

Other jurisdictions hold that such statements are publications, but are qualifiedly privileged. The Restatement of Torts § 577, Comment i (1938), states that the communication within the scope of employment by one agent to another of the same principal is a publication by the agent and by the principal. Communications from one associate to another concerning the discharge of an employee would be qualifiedly privileged. Restatement of Torts § 596, Comment b (1938). See Rickbeil v. Grafton Deaconess Hospital, 74 N.D. 525, 23 N.W.2d 247, 166 A.L.R. 99, 113 (1946). See generally M. F. Patterson Dental Supply Co. v. Wadley, 401 F.2d 167, 171 & n.2 (10th Cir. 1968); 50 Am.Jur.2d Libel and Slander § 167 (1970); Annot., 62 A.L.R.2d 1207 (1975); Annot., 166 A.L.R. 114 (1947).

Unfortunately, we can find no Kentucky case which decided the issue. In several cases that are similar to the fact situation before this Court, Kentucky courts held the statements were qualifiedly privileged without discussing whether or not the same statements within the corporate sphere would have been publications. See Conner v. Taylor, 233 Ky. 706, 26 S.W.2d 561 (1930) (farmer had qualified privilege to tell employee's family who had been sent by employee why farmer did not want employee back); Baker v. Clark, 186 Ky. 816, 827, 218 S.W. 280 (1920) (letter from one shareholder to another concerning an attorney's handling of receivership suit was qualifiedly privileged); McClintock v. McClure, 171 Ky. 714, 720, 188 S.W. 867 (1916) (letter from plaintiff's local bonding agent to state agents of bonding company was qualifiedly privileged). In Holdaway Drugs, Inc. v. Braden, 582 S.W.2d 646 (Ky.1979), the plaintiff alleged his former employer slandered him by repeating accusations that plaintiff had stolen drugs to Equifax, a credit reporting company, to plaintiff in front of other employees, to plaintiff's friend, and to a fellow employee's mother. The trial court treated all the statements alike in its instructions and did not instruct as to qualified privilege. This was error, held the Kentucky Supreme Court. The statements to Equifax were qualifiedly privileged and would be libelous only if malice-defined as ill will or hatred-were proved. These statements should have been separated from the other unprivileged statements.

The District Court relied on Dossett v. New York Mining & Mfg. Co., 451 S.W.2d 843 (Ky.App.1970), in holding the statements in the present case were not published. In Dossett, the company had discovered a shortage of copper wire. One defendant investigated the problem and reported to his supervisor that the plaintiff had admitted taking scrap metal but denied taking the copper wire. The supervisor told the defendant to discharge the plaintiff. The plaintiff claimed that his discharge occurred in the presence and hearing of other employees and that the defendant accused him of being a thief. The issue before the court was whether or not the company could be liable for the defendant's slanderous remarks. The court held the company could be held liable for slanderous remarks made within the scope of business by an agent or servant and reversed summary judgment which had dismissed the complaint.

The court stated:

We continue to adhere to the principles of non-liability announced in Grimes v. Coyle (45 Ky. (6th B. Monroe) 301 (1845)). They apply to discussions and communications within the company which are necessary to its proper function and the enforcement of the law. McDaniel v. Crescent Motors, 249 Ala. 330, 31 So.2d 343, 172 A.L.R. 204 (1947); Prins v. Holland-North America Mortg. Co., 107 Wash. 206, 181 P. 680, 5 A.L.R. 451 (1919); ...

451 S.W.2d at 846 (emphasis original) (footnote omitted). The two cases cited, McDaniel and Prins,...