Erber v. Dun

• Decision Date: 01 January 1882
• Citation: 12 F. 526
• Parties: ERBER & STICKLER v. R. G. DUN & CO.
• Court: U.S. District Court — Eastern District of Arkansas

12 F. 526

ERBER & STICKLER v. R. G. DUN & CO.

United States Circuit Court, E.D. Arkansas.

April Term, 1882

CALDWELL D.J., (charging jury.)

In the year 1880, and for some years prior thereto, the plaintiffs were partners engaged in the mercantile business at Texarkana, in the state of Texas. The defendants are partners engaged in conducting a mercantile agency, having their offices or agencies in many of the principal commercial cities of the United States and Canada. It is the business of defendants to collect, through the reports of local agents and from other sources, information as to the character credit, and pecuniary responsibility of merchants, traders and others engaged in commercial pursuits throughout the country, and to impart the information thus acquired to their subscribers verbally, on application therefor, and by means of a 'daily notification sheet' printed and sent to their subscribers at the agency issuing such sheet. There are probably other modes of conveying to their subscribers such information, but they are not material to be considered in this case. The relations existing between the defendants and their subscribers is disclosed by the contract entered into between them, a copy of which is in evidence, and by the testimony in the case. The following is a copy of the agreement signed by the subscribers to the mercantile agency 'TERMS OF SUBSCRIPTION TO THE MERCANTILE AGENCY.

'Memorandum of the agreement between R. G. Dun & Co., proprietors of the Mercantile Agency, on the one part, and the undersigned subscribers to said agency, on the other part, viz.:

'The said proprietors are to communicate to us, on request, for our use in our business, as an aid to us in determining the propriety of giving credit, such information as they may possess concerning the mercantile standing and credit of merchants, traders, manufacturers, etc., throughout the United States and in the dominion of Canada. It is agreed that such information has mainly been and shall mainly be obtained and communicated by servants, clerks, attorneys, and employes, appointed as our subagents in our behalf, by the said R. G. Dun & Co.; the said information to be communicated by the said R. G. Dun & Co. in accordance with the following rules and stipulations, with which we, subscribers to the agency as aforesaid, agree to comply faithfully, to-wit:

'(1) All verbal, written, or printed information communicated to us, or to such confidential clerk as may be authorized by us to receive the same, and all use of the reference book hereinafter named, and the notification sheet of corrections of said book, shall be strictly confidential, and shall never under any circumstances be communicated to the persons reported, but shall be exclusively confined to the business of our establishment.

'(2) The said R. G. Dun & Co. shall not be responsible for any loss caused by the neglect of any of the said servants, attorneys, clerks, and employes in procuring, collecting, and communicating the said information, and the actual verity or correctness of the said information is no manner guarantied by the said R. G. Dun & Co. The action of said agency being of necessity almost entirely confidential in all of its departments and details, the said R. G. Dun & Co. shall never, under any circumstances, be required by the subscriber to disclose the name of any such servant, clerk, attorney, or employe, or any fact whatever concerning him or her, or concerning the means or sources by or from which any information so possessed or communicated was obtained.

'(3) The said R. G. Dun & Co. are hereby requested to place in our keeping, for our exclusive use, a printed copy of a reference book, containing ratings or markings of estimated capital and relative credit standing of such business men in such states as may be agreed upon, prepared by them or the servants, clerks, attorneys, and employes aforesaid, together with notification sheet of corrections. We further agree that upon the delivery to us of any subsequent edition of the reference book the one now placed in our hands shall be given up to the said R. G. Dun & Co., it being clearly understood and agreed upon that the title to said reference book is vested and remains in said R. G. Dun & Co.

'(4) We will pay in advance . . . dollars for one year's services from the date hereof of said R. G. Dun & Co., together with the use of said reference book pursuant to the foregoing conditions, and such other sum annually thereafter for the same as may be agreed upon between us, verbally or otherwise, subject always to the conditions and obligations above mentioned.

'(5) R. G. Dun & Co. are hereby permitted to reserve to themselves the right to terminate this subscription at any time on the repayment of the amount for the unexpired portion thereof.

'(6) If the inquiries for detailed reports during the year shall exceed . . . in number, the excess we agree to pay for at the rate of . . . per hundred.'

The following is a copy of the ticket of inquiry signed by the subscribers to the agency when they want information in relation to those with whom they have or expect to have business relations:

'THE MERCANTILE AGENCY.

'R. G. Dun & Co.: Give us in confidence, and for our exclusive use and benefit in our business, viz., that of aiding us to determine the propriety of giving credit, whatever information you have respecting the standing, responsibility, etc., of--

Name . . . Business . . .

Town . . . County . . .

State . . .

. . . Subscriber.

St. Louis, . . . 188

No. . . . '

And it was in answer to inquiries thus made by subscribers who had business relations with, or were creditors of, the plaintiffs that the verbal statements of the defendants in relation to the plaintiffs were made.

The plaintiffs do not contest the proposition that the business of the mercantile agency established and conducted by the defendants is, in its general features and purposes as disclosed by the evidence, both lawful and useful. It is unquestionably a lawful business, and it is now generally regarded as of utility and advantage to those engaged in conducting the business and commerce of the country.

In the fall of 1880 reports injurious to the credit and standing of the plaintiffs were in circulation in Texarkana. One of the plaintiffs tells you that these reports originated with one Kozminsky, another merchant and citizen of Texarkana. In time some statement of these reports reached the mercantile agency of the defendants at St. Louis. In what terms these reports reached the defendants' agency at St. Louis is not very clear. The plaintiffs, contend the reports made by Porter, or some one else, at Texarkana, and given out by the defendants to their subscribers calling for the same, was to this effect, viz.: 'Erber & Stickler are selling their goods below cost. ' 'They are about to fail.' 'They have a bad business record. ' 'Their creditors had better be on the guard and look after their claims.' Plaintiffs do not claim to have proven that defendants uttered or published all these statements to their subscribers. After critical examination of the depositions of the witnesses, in the light of the rules of evidence and the law applicable to the question, I feel justified in saying that the only sentence or clause of the alleged slanderous utterances set out in the complaint which is established by sufficient and legal evidence, or, indeed, by any evidence, is this: 'Erber & Stickler are selling their goods below cost. ' But, in the view taken of the case by the court, it is not material to inquire whether the defendants uttered all the words alleged, or only part of them, or more. It is indisputable, under the evidence, that whatever was said orally by the defendants about the plaintiffs and their business was said in good faith and in confidence to their subscribers, who were by reason of their business relations with the plaintiffs interested in knowing their financial and business standing, and in answer to requests made by their subscribers in relation thereto, and without any malice in fact. This being so-- and there is not the slightest evidence to admit of a conclusion to the contrary-- the statements thus made by the defendants to their subscribers in answer to inquiries in relation to the plaintiffs are what the law terms 'privileged communications.' A communication is privileged when made in good faith in answer to one having an interest in the information sought; and it will be privileged if volunteered when the party to whom the communication is made has an interest in it, and the party to whom it is made stands in such a relation to him as to make it a reasonable duty, or at least proper that he should give the information.

Accordingly, the verbal statements which the defendants made in relation to the plaintiffs' business credit and standing as merchants, to their subscribers who had an interest in knowing the facts, and in answer to inquiries made by them, having been made in good faith and upon information on which defendants relied, are privileged, and cannot be made the foundation of an action. But a communication which would otherwise be privileged is not so if made with malice in fact-- that is, through hatred, ill-will, and a malicious desire to injure; and a statement privileged in the first instance may lose its privileged character by being repeated and persisted in after knowledge of the fact that it is false or erroneous has been brought home to its author.

It is not contended that the defendants were actuated by actual malice in first making the statements in relation to the plaintiffs. But the learned counsel for the plaintiffs insist that there is some evidence, enough...