Dupont Engineering Co. v. Nashville Banner Pub. Co.

• Decision Date: 09 March 1925
• Docket Number: No. 1492.,1492.
• Parties: DUPONT ENGINEERING CO. v. NASHVILLE BANNER PUB. CO.
• Court: U.S. District Court — Middle District of Tennessee

13 F.2d 186 (1925)

DUPONT ENGINEERING CO. v. NASHVILLE BANNER PUB. CO.

No. 1492.

District Court, M. D. Tennessee.

March 9, 1925.

Thos. J. Tyne, Sr., Thos. J. Tyne, Jr., and J. M. Peebles, all of Nashville, Tenn., and W. S. Gregg, of Wilmington, Del., for plaintiff.

E. A. Price and Thomas W. Schlater, Jr., both of Nashville, Tenn., for defendant.

GORE, District Judge.

This case for libel is before me on demurrer. The declaration contains one count, and it is averred that plaintiff is a nonresident corporation, "organized and existing," etc., and that the defendant, a resident corporation, is the publisher of a newspaper known as the Nashville Banner; that defendant "falsely and maliciously" published of and concerning plaintiff certain "false and defamatory matter, with intent to defame the plaintiff," etc.

The publication complained of appeared upon two pages of said paper on the 16th day of December, 1923, and because of its great length a verbatim copy will be pretermitted. The original publication is filed as a portion of the declaration. The demurrer is composed of eight grounds. For convenience the grounds will be grouped — grounds 1 and 2 in one group, grounds 6 and 7 in another group, and grounds 3, 4, 5, and 8 in still another group.

Grounds 1 and 2 are: (1) Because the publication set forth in the declaration is insufficient in law to constitute a cause of action; and (2) because the words set forth in the declaration concerning a corporation are not libelous per se, and therefore not actionable without averment of special damages.

It is true that special damages are not averred in the declaration. Defendant insists that, because plaintiff is a corporation, a mere legal fiction, that the publication is not libelous per se, because it cannot be rendered infamous or odious, or made the object of ridicule or contempt, and same does not injure it in its business, trade, profession, or occupation, or financial or business standing.

Defendant also insists that the publication, when read and construed in the sense in which the readers of the paper would ordinarily understand it, including display lines, if given its natural, necessary, and reasonable construction, does not reflect upon plaintiff, and is therefore not libelous, without averment of special damage. The first and important question to be determined is whether or not the alleged publication is libelous per se, because, if it is not, the first and second grounds of the demurrer should be sustained, and the suit dismissed.

Many opinions from all jurisdictions in the United States, both state and federal, are to be found in the reported cases, but to enumerate them would be tedious and of no avail. From the very nature of things, it is impossible to adopt an accurate and readily applicable definition of written language which is libelous per se. Each case must stand or fall upon its own publication, and the court must determine from the publication itself, unaided by extrinsic evidence, whether or not it is actionable without averment of special damage; but certain rules have been laid down, and they are uniform, for the guidance of courts in such cases.

Newell, in his work on Defamation, Slander, and Libel, at page 181, lays down the rule that, "when language is used concerning a person or his affairs, which from its nature necessarily must, or presumably will, as its natural and proximate consequence, occasion him pecuniary loss, its publication prima facie constitutes a cause of action, and prima facie constitutes a wrong, without any allegation or evidence of damage other than that which is implied or presumed from the fact of publication, and this is all that is meant by the terms actionable per se. Therefore the real practical test by which to determine whether special damage must be alleged and proved, in order to make out a cause of action for defamation, is whether the language is such as necessarily must, or naturally and presumably will, occasion pecuniary damage to the person of whom it is spoken."

And at section 448, in his 3d Edition, under head of "Corporations," Mr. Newell says: "A corporation may sue for any libel upon it, as distinct from a libel upon its individual members. It may also sue for slander upon it in the way of its business or trade." He then quotes from the old English case of South Hetton Coal Co. v. North Eastern News Association, 1 Q. B. 133, an opinion by Lord Esher, to the effect that "the law of libel is the same as to all plaintiffs, and that whether there was a libel or not depends on the same question, namely, whether the jury are of opinion that what has been published with regard to the plaintiff would tend in the minds of ordinary sense to bring plaintiff into contempt, hatred, or ridicule, or to injure his character; the question being the same whether the action be brought by a person, a firm, or a company; that though a corporation may not sue for a libel in respect of anything reflecting upon the members thereof personally, yet they may sue for a libel reflecting on the management of their trade or business, without alleging or proving special damage; that the words complained of must attack the corporation in the method of conducting its affairs, must accuse it of fraud or mismanagement, or must attack its financial position. If, however, the corporation be not engaged in any business, it would probably be necessary to prove special damage in any case of slander, and this would be difficult."

And at section 449, Mr. Newell says: "Incorporated companies, established for the purpose of transacting business, may maintain actions of libel the same as individuals for words affecting their business or property, if special damages are alleged and proved. Shoe & Leather Bank v. Thompson, 18 Abb. Prac. (N. Y.) 413.

In the case of Metropolitan Saloon Omnibus Co. v. Hawkins, 4 H. & N. 87, it is said that "a joint-stock company, incorporated under St. 19 and 20 Vict. c. 47, may sue in its own corporate name for words imputing to it insolvency, dishonesty, and mismanagement of its affairs, and this although the defendant be one of its own shareholders." All the text-writers and reported cases, including reported cases from our own state, adopt the foregoing rule. See, also, Ohio & Mississippi Railway Co. v. Press Publishing Co. (C. C.) 48 F. 206; Bank v. Bowdre Brothers, 92 Tenn. 723, 23 S. W. 131; Fry v. McCord Bros., 95 Tenn. 677, 33 S. W. 568; Memphis Telephone Co. v. Cumberland Telephone & Telegraph Co. (6th Cir.) 145 F. 904, 76 C. C. A. 436; Security Benefit Association v. Daily News Publishing Co. (C. C. A.) 299 F. 445; Culmer v. Canby et al. (6th Cir.) 101 F. 195, 41 C. C. A. 302.

In the case of International Text-Book Co. v. Leader Printing Co. (C. C.) 189 F. 86, it was held by District Judge Killits that "no special damages are alleged, but the law seems to be well settled that, where a libel contains an imputation upon an individual or a corporation in respect to its business, the same becomes libelous per se, and in an action thereon it is not necessary to allege special damages." Ohio & M. Ry. Co. v. Press Publishing Co. (C. C.) 48 F. 206; Victor Safe & Lock Co. v. Deright, 147 F. 211, 77 C. C. A. 437, 8 Ann. Cas. 809; Sternberg Manufacturing Co. v. Miller, etc., Mfg. Co., 170 F. 298, 95 C. C. A. 494; Cooley v. Galon, 109 Tenn., 1; Bank v. Bowdre Bros., 92 Tenn. 723, 23 S. W. 131; Mattson v. Albert, 97 Tenn. 232, 36 S. W. 1090.

Defamatory words, falsely spoken or written of a party, which prejudice such person in his profession, trade, or business, are actionable in themselves, without proof of special damages. Bank v. Bowdre Bros., 92 Tenn. 723, 23 S. W. 131; Mattson v. Albert, 97 Tenn. 232, 36 S. W. 1090; Williams v. McKee, 98 Tenn. 138, 38 S. W. 730; J. B. James Co. v. Bank, 105 Tenn. 1, 58 S. W. 261, 51 L. R. A. 255, 80 Am. St. Rep. 857.

Tested by the foregoing rule, laid down by text-writers and reported cases, is the publication in question libelous per se? Does it reflect upon plaintiff in the management of its business? Or does it injure plaintiff in its business or in a pecuniary way? I repeat, before a corporation can maintain a suit for libel, the publication must reflect upon the management of its business, must attack it in the method of conducting its affairs, must accuse it of fraud or mismanagement, or of financial inability, and must be such as is reasonably calculated to cause it pecuniary loss.

In determining whether or not the publication in question is libelous per se, one must read the entire publication, including headlines (Commercial Publishing Co. v. Smith 6th Cir. 149 F. 707, 79 C. C. A. 410; Washington Post v. Chaloner, 250 U. S. 295, 39 S. Ct. 448, 63 L. Ed. 987, and many other cases to the same effect), and, from the whole, say whether or not the charges contained therein would necessarily produce in the minds of sensible persons that plaintiff had been guilty of fraud or misconduct in the management of its business, in its contract with the United States government.

Referring to the publication in question, the first thing the reader would see upon opening the paper would be the sensational headline, reaching entirely across the first page, in large, boldface black type, "McLane Bares Old Hickory Fraud Charges;" next, in large, boldface black type, but not so large, "Claims Government Lost Many Millions," and next follows: "Detailed Figures on Alleged Irregularities Connected with Powder Plant Revealed by District Attorney." And then, throughout the entire publication, is a charge that the government auditors had unearthed "wholesale frauds," "amounting to millions of dollars," and that these charges were made after an "extensive" survey of the records at Old Hickory, "and which covered a period of time extending over several months;" that "after many months of work on the preliminary investigation, during which time the matter was fully presented...