Hospital Care Corp. v. Commercial Cas. Ins. Co.

• Citation: 9 S.E.2d 796,194 S.C. 370
• Decision Date: 01 July 1940
• Docket Number: 15113.
• Parties: HOSPITAL CARE CORPORATION v. COMMERCIAL CASUALTY INS. CO. et al. NATIONAL HOSPITAL SERVICE, Inc., v. SAME. SECURITY INDEMNITY CO. v. SAME.
• Court: United States State Supreme Court of South Carolina

9 S.E.2d 796

194 S.C. 370

HOSPITAL CARE CORPORATION v. COMMERCIAL CASUALTY INS. CO. et al.

NATIONAL HOSPITAL SERVICE, Inc., v. SAME.

SECURITY INDEMNITY CO. v. SAME.

No. 15113.

Supreme Court of South Carolina

July 1, 1940

There are two other complaints--by National Hospital Service, Inc. and Security Indemnity Company against the same two defendants--which are practically identical, except for the name of the plaintiff, and to which both defendants likewise demurred. The demurrers in the three cases were submitted on comprehensive briefs at the October term under agreement of counsel that the same decision should be made in each case any reasons to be stated in this one, but considered as applicable to the others.

The demurrers to the first cause specify that the publication is not defamatory, either per se or per quod. The briefs exhibit no difference between counsel as to the controlling rules of law, but a wide divergence as to the application thereof and the construction of the circular thereunder.

A corporation may maintain an action for libel injuring it in its business, although it has no reputation or character in a personal sense and cannot suffer humiliation; so that, in determining whether a publication is defamatory of a corporation, it should be borne in mind that the injury must be one to its business, resulting in pecuniary loss. 37 C .J. 11; Memphis T. Co. v. Cumberland T. Co., 6 Cir., 145 F. 904. The definition of libel in this respect is applied as stated in Smith v. Bradstreet Co., 63 S.C. 525, 530, 41 S.E. 763, and approved in Hubbard v. Furman University, 76 S.C. 510, 511, 57 S.E. 478.

The demurrers to the first cause of action must be sustained under the authority of Hubbard v. Furman University, supra; McGregor v. State Co., 114 S.C. 48, 103 S.E. 84; Oliveros v. Henderson, 116 S.C. 77, 106 S.E. 855; and Duncan v. Record Publishing Co., 145 S.C. 196 143 S.E. 31.

"The fact that supersensitive persons, with morbid imaginations may be able, by reading between the lines of an article, to discover some defamatory meaning therein, is not sufficient to make it libelous." Reid v. Providence Journal Co., 20 R.I. 120, 37 A. 637.

"*** A construction different from what they bear in their common acceptation and meaning cannot be placed upon the words. It is not the intention of the speaker or writer, or the understanding of any particular hearer or reader, that is to determine the actionable quality of the words. It is rather the meaning that the words in fact conveyed; rather the effect which the language complained of was fairly calculated to produce and would naturally produce upon the minds of persons of reasonable understanding, discretion and candor taking into consideration accompanying explanations and the surrounding circumstances which were known to the hearer or reader. ***" (Italics added.) Citing Pegram v. Styron, 1 Bailey 595, 17 S.C.L. 595; Shecut v. McDowel, 1 Tread.Const. 35, 6 S.C.L. 35, 36 C.J. 1156.

A reasonable analysis of the circular, both as a whole and in its parts, impels the conclusion that it is an ordinary competitive advertisement and does not go so far as to injure plaintiff in its business. It refers generally to insurance companies throughout the United States and Canada as a class. The name of defendant company appears in the heading, claiming a reputation for dependable service; with the statement that it operates in 46 States and Canada and is licensed and bonded in this State for the protection of its policy-holders; and there is nothing later in the circular to limit the scope thereof or the general class of insurance companies to which it refers.

The reasonable interpretation is that the circular is seller's talk. It praises defendant's policies and, in effect claims that these are amongst the best to be had. It also warns generally all purchasers of insurance to investigate and make sure that they get sound policies, and then suggests that purchasers may solve worries and doubts in this respect by taking policies from defendant. In so doing, by implication, although not expressly, defendants belittle by comparison the policies of their competitors, but the circular refrains from any defamatory charge or any false statement of fact concerning competitors, and is not defamatory.

From the general viewpoint, the circular is similar to the publication in the Hubbard case. There the publication praised what the college had to sell--it claimed that its new professor and the opportunities for musical education offered under him were the best available, and to that extent, by necessary implication, although not expressly, it belittled by comparison the plaintiff and the opportunities for musical education offered by him as a competitor. But the Court said: "Society advances by criticism, preference, and selection." 76 S. C. at page 515, 57 S.E. at page 480.

Our public policy is reflected by our statutes. Alderman v. Alderman, 178 S.C. 9, 181 S.E. 897, 105 A.L.R. 102. It is a matter of public interest that purchasers of insurance secure policies in companies that are financially sound and honestly and capably managed, as evidenced by the statutes regulating insurance companies. Every person has the right of fair comment and criticism in a matter of public interest; this stems from the constitutional guaranty of freedom of speech. Oliveros v. Henderson, supra. Defendants were not deprived of this right because the circular was primarily intended to promote the competitive sale of their insurance policies.

The construction of the circular contended for by plaintiff gives effect to every possible evil implication that may occur to a morbid imagination, renders the advertisement ambiguous, and makes the question of libel or no libel one for the jury. The adoption of such a rule would unreasonably limit the right of fair comment and go far toward abolishing competitive advertisement--a result not in the public interest, since competition is the life of trade.

A more detailed consideration of the language of the circular reaches the same result, bearing in mind that in deciding a demurrer the Court will take into consideration matters of which it has judicial notice. "Courts will not profess to be more ignorant than the rest of mankind, *** and should take notice of whatever is or ought to be generally known within the limits of their jurisdiction." State v. Broad R. P. Co., 177 S.C. 240, 181 S.E. 41, 48; also last paragraph in McGregor case.

Plaintiff contends that the complaint alleges that the circular was devoted entirely to the discussion of hospital insurance. But the complaint (paragraph 4) quotes the first page of the circular, claimed to contain the defamatory matter, and alleges that the balance of the circular refers exclusively to hospitalization insurance benefits offered for sale by defendants, and by a coupon invites inquiries to the Columbia office of defendants. There is no allegation that the portion of the circular not quoted limits the scope or affects the meaning of the language quoted from the first page thereof. The quoted portion of the circular carries the word "insurance" standing alone in two instances, "insurance business" in one, and "insurance experience" in another; neither the word "hospital" nor the word "hospitalization" appear therein.

Plaintiff further contends that the words "Ask your Insurance Department for the answer", found at the end of the first paragraph of the circular, limit the scope thereof to South Carolina. But the Court knows that every State in the Union has a department of its government known as the "Insurance Department", and these words are just as appropriate in a circular nationwide in its scope as they would be in one limited to South Carolina.

The statement of the first paragraph of the circular in ordinary type, in effect that several small insurance companies have defaulted during the past ten years, is a reference to the past as a matter of financial history throughout the United States and Canada, and not to any existing insurance company whatsoever. This is so, even if the statement can be construed as limited to South Carolina. It is a true statement of fact in either event, as the Court judicially knows, and is not defamatory of any existing insurance company.

The statements claimed to have injured plaintiff's business are found in the second paragraph in ordinary type, commencing "Today the market is flooded with circulars". The statement is made that these circulars are put out by small, inexperienced companies, recently entering the insurance business. The writer stipulates, as a part of this statement, that these companies "no doubt, mean well". It cannot be defamatory of plaintiff to say that it flooded the market with circulars or that it is a small, inexperienced company, recently entering the insurance business, in view of the allegations of paragraph 3 of the complaint that plaintiff has from time to time since its organization issued advertisements and circulars, that it is a small stock company, that it was formed within the past four years and is a comparatively new company.

Libel is said to be found in the remaining portion of this paragraph, which advises purchasers of insurance "to find out the financial standing of the company in which they are to place their money"; to "investigate its assets and liabilities and years of insurance experience in order to determine if the company is able to carry out its obligations, especially in case of epidemics ***." This admonition or advice is followed by the suggestion that worries and doubts in this respect may be relieved by taking a policy in the defendant company, with a statement that defendant's assets and financial...