Knapp Engraving Co. v. Keystone Photo Engraving Corp.

• Decision Date: 14 February 1956
• Citation: 148 N.Y.S.2d 635,1 A.D.2d 170
• Parties: KNAPP ENGRAVING CO., Inc., Plaintiff-Appellant, v. KEYSTONE PHOTO ENGRAVING CORP., impleaded etc., Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 635

148 N.Y.S.2d 635

1 A.D.2d 170

KNAPP ENGRAVING CO., Inc., Plaintiff-Appellant, v. KEYSTONE PHOTO ENGRAVING CORP., impleaded etc., Defendant-Respondent.

Supreme Court, Appellate Division, First Department.

Feb. 14, 1956.

Maurice Knapp, New York City, for appellant.

Maurice V. Seligson, New York City, for respondent.

Before PECK, P. J., and BOTEIN, COX, FRANK and BERGAN, JJ.

BOTEIN, Justice.

Plaintiff sues to restrain defendants from carrying on a conspiracy to divert its customers and employees to defendant Keystone Photo Engraving Corp. Keystone has asserted two counterclaims, and plaintiff appeals from the denial of its motion to dismiss both counterclaims for insufficiency.

The first counterclaim alleges in substance that plaintiff, entering into negotiations with Keystone concerning a proposed sale or merger, agreed that all information received during the negotiations would remain confidential; that in reliance thereon Keystone disclosed confidential information about its operations; and that plaintiff thereafter falsely and maliciously circulated defamatory information to the trade that defendant was insolvent and about to go out of business.

The second counterclaim alleges that the instant action is without foundation and was instituted and publicized by plaintiff with full knowledge of its invalidity, for the purpose of intimidating Keystone's customers and eliminating Keystone as a competitor.

Keystone, while contending that the gravamen of the first counterclaim is the malicious circulation of false and defamatory information, does not allege the false and defamatory information in haec verba, or set forth special damages. See Al Raschid v. News Syndicate Co., 265 N.Y. 1, 191 N.E. 713; Locke v. Benton & Bowles, 253 App.Div. 369, 2 N.Y.S.2d 150.

It attempts to justify the omission of these conventional tort requirements on the ground that the counterclaim should be regarded as a 'prima facie tort'. A cause of action, however, must be judged by its allegations, not its label. A prima facie tort derives from the ancient form of action on the case, covering those situations where intentional harm has been inflicted, resulting in damage, by an act or series of acts which might otherwise be lawful and which do not fall within the categories of traditional tort actions. Aikens v. State of Wisconsin, 195 U.S. 194, 25 S.Ct. 3, 49 L.Ed. 154; Opera on Tour, Inc. v. Weber, 285 N.Y. 348, 34 N.E.2d 349, 136 A.L.R. 267; American Guild of Musical Artists v. Petrillo, 286 N.Y. 226, 36 N.E.2d 123; Advance Music Corp. v. American Tobacco Co., 296 N.Y. 79, 70 N.E.2d 401; Brandt v. Winchell, 283 App.Div. 338, 127 N.Y.S.2d 865, amended complaint dismissed 286 App.Div. 249, 141 N.Y.S.2d 674.

In Ruza v. Ruza, 286 App.Div. 767, 770, 146 N.Y.S.2d 808, 811, we recently said that 'where specific torts account for all the damages sustained, whether provable as general damages or pleadable and provable as special damages, prima facie tort does not lie.' If, as could be inferred from a reading of the first counterclaim, Keystone was damaged by plaintiff's fraudulent misrepresentations and campaign of defamation, it can recover all the damages afforded by the law through the medium of the so-called 'traditional remedies'. But its causes of action must be properly pleaded, meeting the well-grooved requirements. If it intends to rely on prima facie tort, consisting of the disclosure of factually accurate and legally obtained information, secured and disseminated for the purpose of maliciously causing it injury, then its pleading should conform to the norms enunciated in the Brandt v. Winchell cases, supra.

Different considerations apply to the second counterclaim. On analysis, it offers the technical ingredients of a prima facie tort. While Keystone...