Diplomat Electric, Inc. v. Westinghouse Electric Supply Co.

• Decision Date: 02 August 1967
• Docket Number: No. 23341.,23341.
• Citation: 378 F.2d 377
• Parties: DIPLOMAT ELECTRIC, INC., Appellant, v. WESTINGHOUSE ELECTRIC SUPPLY COMPANY, a DIVISION OF WESTINGHOUSE ELECTRIC CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

378 F.2d 377 (1967)

DIPLOMAT ELECTRIC, INC., Appellant, v. WESTINGHOUSE ELECTRIC SUPPLY COMPANY, a DIVISION OF WESTINGHOUSE ELECTRIC CORPORATION, Appellee.

No. 23341.

United States Court of Appeals Fifth Circuit.

May 29, 1967.

Rehearing Denied August 2, 1967.

COPYRIGHT MATERIAL OMITTED

Milton E. Grusmark, Natalie Baskin, Harris J. Buchbinder, Miami Beach, Fla., Henry J. Prominski, Miller, Tucker & Roth, Fort Lauderdale, Fla., for appellant.

Richard E. Reckson, Eugene C. Heiman of Heiman & Heiman, Miami, Fla., for appellee.

Before MARIS,^* BROWN and THORNBERRY, Circuit Judges.

MARIS, Circuit Judge:

This is an appeal from a summary judgment entered in the District Court for the Southern District of Florida in favor of the defendant, Westinghouse Electric Supply Company, in an action for libel and slander brought by plaintiff, Diplomat Electric, Inc., to recover damages resulting from an allegedly libelous letter and slanderous statements. The defendant answered, denying generally the allegations of the complaint but admitting the mailing of the letter, and in its defense asserted privilege and probable cause. Upon defendant's motion for summary judgment, the district court, after hearing argument and examining the pleadings, affidavits, depositions and pretrial stipulation, held as a matter of law that the letter and the oral statements were not actionable per se. Judgment was entered for the defendant and the plaintiff's cause of action was dismissed. The plaintiff appealed. The complaint alleged that the plaintiff, a Florida corporation engaged as an electrical contractor, and the defendant, a Pennsylvania corporation engaged as a supplier of electrical equipment, had contracted for electrical materials needed by plaintiff on its construction jobs. All the events involved occurred in Florida. On January 5, 1965, defendant's credit manager mailed a letter to plaintiff, with copies to Fred Howland, Inc., the general contractor on one of the construction jobs, to Phillips Petroleum Company, the owner of the project upon which plaintiff was working, and to J. M. Lloyd, project-manager for the owner, containing the following:

"As you know, there is a balance due on your account with us for the subject job of $4,985.23. This account has been delinquent since August, 1964, but we continued to furnish materials for this job through November 1964, relying on your promise that you would pay the balance and then keep your account current.

"You have failed to keep your several commitments and as we previously advised by telephone and letters on September 10, 1964, October 2, 1964, and November 17, 1964. We have stopped fabrication of all materials on order and we will not resume fabrication or make any further delivery of any material on order until this balance is paid in full."

The complaint charged that the defendant libeled the plaintiff's credit and business reputation in that defendant knew that no amount was due; that on the contrary the defendant was delinquent in the fabrication and delivery of the materials fully knowing that plaintiff had time schedules to meet for the installation of the various materials and that failure to maintain the time schedules would reflect severely on plaintiff's business reputation, that it would jeopardize his contract with Howland and result in great loss and damage to plaintiff. It was further alleged that defendant knew that information from a source which was considered reliable would be likely to cause the owners, general contractors and bonding companies to reduce the amounts of legitimate requisitions of payments in an effort to protect themselves against possible loss; to refuse to contract with the subcontractor, or refuse for no other reason to bond it. The complaint further alleged that six days later the defendant advised Howland, the general contractor, by telegram to disregard the January 5th letter but still later, in a telephone conversation with Howland's project manager, directed him to disregard the telegram and informed him that the letter was accurate.

The complaint next charged that the defendant damaged plaintiff's business reputation and credit when the defendant's agents told George Kinsman, vice president of Florida Power & Light Company, owner of an office construction project upon which plaintiff was working, and Charles Braznell, president of Wesley Construction Co., the general contractor, that plaintiff owed a past due bill in the amount of $102,000 for fixtures delivered to that office building and that defendant intended to file a claim of lien, knowing that no amount was past due and that defendant had waived its lien rights by executing a final release. As a consequence, the owner refused to pay the requisition due Wesley for work done by plaintiff, Wesley refused to pay plaintiff the sum of $80,000 due, and the job was shut down, all to the great damage to plaintiff's reputation in the construction industry in South Florida.

The complaint further charged that the defendant showed its malice and intention to damage the plaintiff's credit and business reputation in that through its agents, defendant falsely informed Apgar & Markham Construction Co., Inc., the general contractor with whom plaintiff had contracted for electrical work on the Miami Springs High School construction job, that defendant intended to file a lien against the property of the owner, the Board of Public Instruction of Dade County, knowing at the time that defendant had executed a final release and that no sums were owing. As a result, the owner refused to pay the contractor the money due, the contractor in turn refused to pay plaintiff, and plaintiff's credit and business reputation suffered damage.

Finally, the complaint charged that the defendant demonstrated its malice when its agent notified James Thompson, president of James Thompson, Inc., general contractor on the Hallandale Junior High School job, that plaintiff owed sums past due in an amount which exceeded the balance due plaintiff on completion of the contract, knowing that, at the time, the account was paid in accordance with the terms of the contract. As a result, Thompson refused to pay plaintiff the sums due, demanded a bond which had not been previously required and which was impossible to provide since the job was substantially completed and subsequently caused Thompson to refuse to permit plaintiff to bid on further construction work, which in the absence of the alleged slander plaintiff would have had an opportunity to bid upon.

Under the facts, thus alleged, the district court found that the complaint contained sufficient allegations to indicate that the letter and the statements were false and further that the complaint sufficiently alleged malice with respect to all of the statements. Although the court found falsity and malice, it concluded that no special damage had been alleged as a result of the January 5th letter, or the statement to Howland reaffirming that letter, or the statement to Apgar & Markham Construction Co., Inc. The district court then turned to the question whether the letter and statements were actionable per se and concluded that the information contained in the January 5th letter, which, the court found, was the subject matter of all the alleged slanderous statements, could not be considered to be libelous per se, saying:

"* * * Clearly, a communication by a supplier to a general contractor and owner that a subcontractor has not paid an amount to the supplier is not of such an injurious character that would necessarily import damage and malice."

In respect to the statements allegedly made to George Kinsman and to Charles Braznell, the district court found that the deposition of George Kinsman established that the statement was never communicated to him. With regard to the statement allegedly made to James Thompson, the court found that the evidence showed that plaintiff received final payment from the general contractor for that job, that plaintiff had in fact bid on other jobs for Thompson and therefore that the plaintiff had not sustained the damage it alleged. Thus finding that the letter and statements, as a matter of law, were not actionable per se and that no special damage had been shown, the district court entered summary judgment for the defendant and dismissed the plaintiff's cause of action.

Since the alleged defamations were published in Florida the law of that State is controlling. It is well settled in Florida, as elsewhere, that a corporation, just as an individual, may be liable for defamation by its employees.¹ It is equally well settled that the credit, property or business reputation of a corporation can be injured by a false publication of defamatory matter, written or oral, which tends to prejudice it in the conduct of its trade or business, or to deter third persons from dealing with it.² Since a corporation has no reputation in the sense that an individual has, it is only with respect to its credit, property or business that a corporation can be injured by a false publication.³ In determining whether the business reputation of a corporation has been injured, the test is not different from that which would be applied in determining whether an individual's business reputation has been defamed.

No general rule can be laid down defining absolutely what words are defamatory and what are not. Words which would injure A's reputation, might do no harm to B's. In determining whether or not particular language is defamatory, the particular facts in each case govern and the effect, not the form, of the language is the criterion.⁴ As was observed by the Supreme Court of Florida in Adams v. News-Journal Corporation, 1955, Fla., 84 So.2d 549, 551, the "task of testing the effect of the language used is not an easy one because there is no fixed rule that would guide us to a conclusion. The judgment in each case must depend upon the facts peculiar to that...