Fawcett Publications, Inc. v. Morris

• Decision Date: 17 July 1962
• Docket Number: No. 39485,39485
• Citation: 1962 OK 183,377 P.2d 42
• Parties: FAWCETT PUBLICATIONS, INC., Plaintiff in Error, v. Dennit MORRIS, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 42

377 P.2d 42

1962 OK 183

FAWCETT PUBLICATIONS, INC., Plaintiff in Error, v. Dennit MORRIS, Defendant in Error.

No. 39485.

Supreme Court of Oklahoma.

July 17, 1962.

Rehearing Denied Oct. 11, 1962.

Dissenting Opinion Oct. 16, 1962.

Syllabus by the Court

1. The question of whether a foreign corporation is doing business in this state within the meaning of 18 O.S.1961 §§ 1.17 and 472, involves not only the ownership, possession or control of property, but also such functions as dealing with others in reference thereto, the exercise of discretion, the making of business decisions, the execution of contracts, the marketing of products by advertising or solicitation, collecting accounts, and kindred functions. Where an important combination of these functions is being performed within the state, such corporation is doing business in the state, and is amenable to service of process as provided in said sections of the statute.

2. A publication which when measured by its natural and probable effect upon the mind of the average lay reader is clearly defamatory on its face, is libelous per se.

3. Whether an article is of a libelous character per se, and whether it has application to a particular party plaintiff, are entirely separate and distinct questions, and should not be confused. The answer to the first question is to be found in the article itself. The answer to the second question is to be found in the proof supporting allegations in the complaint. Those proofs may consist of either the article itself, or of extrinsic evidence.

4. In a damage action arising from the defamation of a group, the question of whether an individual member thereof may maintain his separate action for damages depends in some degree upon the size of the group, but more upon the likelihood that the complaining member of the group has been damaged.

5. In a libel action, in order for the alleged defamatory publication to be shielded on the ground that it was qualifiedly or conditionally privileged, the communication must be a privileged one, uttered on a privileged occasion, by a privileged person, to one within the privilege.

6. In an action where punitive damages are proper, evidence of the financial worth of defendant is competent.

7. The amount of general damages to be awarded for a publication libelous per se is peculiarly within the province of the jury, and a verdict rendered by the jury will not be disturbed unless excessive.

Butler, Rinehart & Morrison, Oklahoma City, for plaintiff in error, Fawcett Publications, Inc., and cross-defendant in error, Mid-Continent News Co.

Robert G. Grove, Leo Winters, Oklahoma City, for defendant in error and cross-plaintiff in error, Dennit Morris.

Appeal from the District Court of Oklahoma County; Clarence M. Mills, Judge.

Action for damages for libel by plaintiff, Dennit Morris, against Fawcett Publications, Inc., publisher, and Mid-Continent New Company, distributor; from judgment in favor of plaintiff against Fawcett Publications, Inc., said defendant appeals; and from judgment sustaining defendant Mid-Continent News Company's motion for directed verdict and dismissal of action, plaintiff, Dennit Morris, cross-appeals. Affirmed.

JACKSON, Justice.

In the trial court, plaintiff Dennit Morris sued Fawcett Publications, Inc., the publisher of 'True' Magazine, and Mid-Continent News Company, its distributor, for damages for libel. The suit grew out of an article in a 1958 issue of 'True' Magazine entitled 'The Pill That Can Kill Sports', concerning the use of amphetamine and other similar drugs by athletes throughout the country.

Plaintiff alleged in his petition that he was a member of the 1956 Oklahoma University football team; that the article imputed to him a crime against the laws of the state of Oklahoma and was libelous per se; and asked for general damages in the amount of $100,000, and punitive damages in the amount of $50,000.

At the conclusion of the evidence, the trial court instructed the jury to return a verdict against Fawcett, leaving only the amount of the damages for jury determination. Mid-Continent's motion for directed verdict in its favor was sustained.

The jury returned a verdict for plaintiff and against Fawcett in the amount of $75,000 for actual damages.

Fawcett is a foreign corporation without a service agent in this state, and service was had upon Fawcett herein by serving the Secretary of State pursuant to statute. On appeal, Fawcett, for its first proposition, argues that the court had no jurisdiction for the reason that Fawcett was not 'doing business' in the state within the meaning of 18 O.S.1961, Sections 1.17 and 472, which authorize service upon the Secretary of State.

From uncontradicted evidence in the record, it appears that Fawcett had contracted with Mid-Continent to distribute its magazines in a portion of the State of Oklahoma. The 'territory' is not described in the contract, and is left for all practical purposes to the discretion of Fawcett. Magazines were to be forwarded to Mid-Continent without specific orders, in amounts entirely within the discretion of Fawcett. Mid-Continent agreed to distribute not only the magazines and books named in the contract, but all 'other matter' which Fawcett might choose to forward. All prices, sales dates and release dates were to be fixed by Fawcett and were subject to change at any time by Fawcett. Mid-Continent agreed to keep dealer records acceptable to Fawcett, showing 'initial distribution, re-orders, pickups, returns and net sales'. Provision was made for 'returns', and credit thereon, and Mid-Continent agreed to dispose of unsold copies in any manner Fawcett should direct. Mid-Continent agreed to distribute to its retail dealers all 'advertising, dealers' helps, posters, circulars, and other material' which Fawcett chose to supply. It agreed to furnish Fawcett a complete list of its dealers, showing address and line of business, and showing each dealer's 'draw' of each of Fawcett's magazines, publications and other matter. The contract was for 10 years, but could be terminated by either party 'at any time with or without cause by giving ten (10) days written notice' to the other party.

Fawcett also employed a 'traveling representative' whose duty it was to call on both wholesalers and retailers, to 'check up' on the manner of distribution, display and sale of Fawcett's publications and other matter. He testified that the wholesalers '* * * have an agreement with our company to do certain things, such as the putting out of our magazines on certain dates and displaying them in certain ways in the retail outlets, drugstores, supermarkets and so forth, and it is just my job to go around and see that they are fulfilling their agreement with our company'. Although he testified that he actually had no authority, he did make reports to Mid-Continent and to his home office concerning his findings. He also made 'suggestions' to Mid-Continent and the retailers as to the proper display and sale of his company's publications.

It thus appears that although the contract refers to Mid-Continent as an independent contractor, Fawcett retained almost unlimited discretion as to the details of the distribution, promotion, display and sale of its publications.

It should be noted here that the jurisdictional question raised in the brief of plaintiff in error (Fawcett) is restricted entirely to the question of whether Fawcett was 'doing business' in Oklahoma within the meaning of 18 O.S.1961 §§ 1.17 and 472. No question of due process under the Fourteenth Amendment of the United States Constitution is presented.

The question of whether a foreign corporation is 'doing business' within this state within the meaning of the statute must depend upon the facts in each particular case. Howes Company v. W. P. Milling Co., Okl., 277 P.2d 655 at page 657; 20 C.J.S. Corporations § 1920, at page 151.

In Wills v. National Mineral Co., 176 Okl. 193, 55 P.2d 449, this court held:

'Doing business involves not only ownership, possession or control of property, but also such functions as dealing with others in reference thereto, the exercise of discretion, the making of business decisions, the execution of contracts, the marketing of products by advertising and solicitation, collecting accounts, and kindred functions.

Wherever an important combination of these functions is being performed, it is the doing of business at the place of such performance.'

Without belaboring the question of when title to the magazines published by Fawcett actually moved to Mid-Continent (and thus the question of whether Fawcett owned property in Oklahoma) we have no doubt that Fawcett had practical control over such property even after it had reached the magazine racks of the retailer. As shown above, practically unlimited discretion, under the Fawcett contract with Mid-Continent, was reserved in Fawcett. As to the 'marketing of products by advertising and solicitation', under the contract Mid-Continent was bound to distribute any advertising matter the company might send; as to solicitation, Mid-Continent was bound to 'cooperate with the Company's plans to increase the sale of its magazines' (emphasis supplied). Note that Fawcett was not required to cooperate with Mid-Continent's plans. From the practical standpoint, Fawcett could diminish or increase Mid-Continent's territory at will; it could set up and do business with any other competing distributor; it could require 'check-up' reports on the retailers as often as it desired; it could send Mid-Continent as many, or as few, copies of any particular publication as it deemed advisable; it could cancel the contract without cause upon ten days' notice.

Considering the terms of the contract, and the activities of Fawcett's 'traveling representative', we are forced to the conclusion that for all practical purposes Mid-Continent was little more than a mere conduit through which Fawcett...