James v. Federal Deposit Insurance Corporation, Civ. A. No. 9464.

• Decision Date: 10 June 1964
• Docket Number: Civ. A. No. 9464.
• Parties: Noel Bryant JAMES v. FEDERAL DEPOSIT INSURANCE CORPORATION, John W. Dougherty and Farmerville Bank, Otis C. Fuller, Administrator for the Succession of Joe R. Fuller.
• Court: U.S. District Court — Western District of Louisiana

231 F. Supp. 475

Noel Bryant JAMES v. FEDERAL DEPOSIT INSURANCE CORPORATION, John W. Dougherty and Farmerville Bank, Otis C. Fuller, Administrator for the Succession of Joe R. Fuller.

Civ. A. No. 9464.

United States District Court W. D. Louisiana, Monroe Division.

June 10, 1964.

John S. C. Massey, West Monroe, La., for plaintiff.

Edward L. Shaheen, U. S. Atty., E. V. Boagni, Asst. U. S. Atty., Shreveport, La., Hudson, Potts & Bernstein, Monroe, La., Armand Rabun, Farmerville, La., for defendants.

HUNTER, Judge.

Noel Bryant James, former President of the Farmerville Bank and the Sterlington Bank, seeks to recover damages from John W. Dougherty, Federal Deposit Insurance Corporation, Otis C. Fuller (Provisional Administrator of the Succession of Joe R. Fuller), and the Farmerville Bank, for damages allegedly sustained by James as a result of certain statements purported to be libelous and slanderous made by John W. Dougherty, a Bank Examiner, and Joe R. Fuller, President of the Farmerville Bank, in connection with the investigation and trial of a criminal action against Noel Bryant James.

Instant action was initially filed in State Court and subsequently removed here. Joe R. Fuller departed this life, and by proper motion, Otis C. Fuller, Provisional Administrator of his Succession, has been substituted as a party defendant.

During the years 1943 through April 14, 1958, Noel Bryant James was President of the Farmerville Bank in Farmerville, Louisiana and was a member of its Board of Directors. Certain difficulties were encountered in connection with the collection of a loan made by that bank to W. A. and Shirley Bradley, and as a result of certain transactions connected with the operations and sale of a store owned and operated by the Bradleys, certain charges were made by Federal Deposit Insurance Corporation. Plaintiff was indicted and tried for the offense of embezzlement in the Federal District Court. He was promptly acquitted. Plaintiff now alleges that certain statements made by the Bank Examiner, Dougherty, and the President of the bank, Joe R. Fuller, were libelous and slanderous, and has brought this action for damages allegedly sustained as a result of those statements.

All defendants have filed motions to dismiss and/or motions for summary judgment. These motions are now before the Court.

FEDERAL DEPOSIT INSURANCE CORPORATION

Plaintiff asserts that jurisdiction against F.D.I.C. exists by virtue of Title 12, U.S.C.A. § 1819, which provides the F.D.I.C. with authority to sue and be sued.

F.D.I.C. has filed a motion to dismiss, challenging jurisdiction, and insists that the passage of the Federal Tort Claims Act precludes an action in tort for money damages directly against a "sue and be sued" federally created corporation.

The position of F.D.I.C. is well taken. Freeling v. Federal Deposit Insurance Corporation, D.C., 221 F.Supp. 955 (1962), affirmed 326 F.2d 971, 10 C.A. 1963.

The motion to dismiss filed by Federal Deposit Insurance Corporation is sustained.

JOHN W. DOUGHERTY

The record reveals conclusively that the statements made by Dougherty in his reports and in testifying were made by him in the discharge of his official duties as an employee of the Federal Deposit Insurance Corporation, and in relation to matters committed to him for determination.

These statements and utterances being absolutely privileged, no action for libel and slander can be made on account of such testimony or statements. Barr v. Matteo, 360 U.S. 564, 79 S.Ct. 1335, 3 L. Ed.2d 1434; Preble v. Johnson, 10 C.A. (1960), 275 F.2d 275; Sauber v. Gliedman, 7 C.A. (1960), 283 F.2d 941; Brownfield v. Landon, (1962), 113 U.S. App.D.C. 248, 307 F.2d 389; Poss v. Lieberman, 2 C.A. (1962), 299 F.2d 358. Whether or not the acts of federal employees, acting in the scope of their employment, are absolutely privileged is a matter which involves federal and not state law. Wozencraft v. Captiva, 5 Cir., 314 F.2d 288; Howard v. Lyons, 360 U.S. 593, 79 S.Ct. 1331, 3 L.Ed.2d 1454. This being so, the privilege to Dougherty was absolute.

The motion for summary judgment filed by Dougherty must be granted. It is.

To paraphrase from Justice Learned Hand in the Biddle case, Gregoire v. Biddle, (2 Cir., 177 F.2d 579), we would add here that a public official guilty of using his powers to vent his spleen upon innocent people should not escape liability for any damage suffered by the innocent and if it were possible in practice to confine such complaints to the guilty, it would be monstrous to deny recovery. The reason for doing so is that it is impossible to know whether the claim is well founded until the case has been tried, and that to submit all officials, the innocent as well as the guilty, to the burden of a trial would dampen the ardor of all but the most resolute, or the most irresponsible in the discharge of their duties. Here, James — a prominent and highly respected citizen — had been completely cleared of any wrongdoing, but still under the law he has no remedy against Dougherty.

FULLER AND THE FARMERVILLE BANK

Here, plaintiff seeks damages against the Farmerville Bank and its President, Fuller, because of alleged slanderous statements made by the latter when duly subpoenaed to appear and testify before a legally impanelled grand jury or to a representative of a federal investigating agency charged with the responsibility of investigating banking matters, and while subpoenaed as a witness for the government in the trial of a criminal prosecution. The criminal action came about in disregard of the written request of the officials of the Farmerville Bank and its President, Joe R. Fuller. In connection with the liability sought to be imposed on the substituted defendant, Otis C. Fuller, and the Farmerville Bank, the complaint of the plaintiff alleges as follows:

"11."

"That JOE R. FULLER, individually and in his capacity as Chairman of the Board of Directors of FARMERVILLE BANK, did on or about April 19, 1962, state under oath that he had no knowledge of a bankruptcy proceedings instituted by Shirley H. Bradley; and further the said JOE R. FULLER did on or about June 20, 1958, state to JOSEPH J. ENGLEHART `that he was not familiar with the details concerning the Bradley bankruptcy matter, but was of the opinion that petitioner should refund to the bank any monies that the bank is entitled to and that he, (the said JOE R. FULLER, individually and in his capacity as Chairman of the Board of Directors) intended to see to it that your petitioner made restitution therefor'; and further that the said joe r. fuller did on or about February 3, 1959, state to JOSEPH G. ENGLEHART that the FARMERVILLE BANK lost FOURTEEN THOUSAND, TWO HUNDRED TEN AND NO/100 ($14,210.00) DOLLARS on the loan of W. A. and Shirley H. Bradley, which loss was attributable to your petitioner; and further the said JOE R. FULLER did state to the said JOSEPH G. ENGLEHART that the Board of Directors of the FARMERVILLE BANK expressed the opinion that your petitioner should return the FIVE THOUSAND AND NO/100 ($5,000.00) DOLLARS note to the FARMERVILLE BANK in recompense for part of the loss sustained by the bank on the above mentioned Bradley note; that the statements made by the said JOE R. FULLER were

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