McDowell v. Credit Bureaus of Southeast Missouri, Inc., 69559

Decision Date15 March 1988
Docket NumberNo. 69559,69559
Citation747 S.W.2d 630
PartiesDavid McDOWELL, et al., Appellants, v. CREDIT BUREAUS OF SOUTHEAST MISSOURI, INC., a corporation, Respondent.
CourtMissouri Supreme Court

Kenneth Waldron, Scott E. Walter, Jackson, for appellants.

David M. Remley, Cape Girardeau, for respondent.

Robert B. Hoemeke, Joseph E. Martineau, St. Louis, for amicus curiae Pulitzer Pub. Co. and Dun & Bradstreet Inc.

James C. Swearengen, Mark W. Comley, Barry V. Cundiff, Jefferson City, for amicus curiae Mo. Bankers Assoc., et al.


Appellants appeal from a judgment entered upon a jury verdict by the Circuit Court of Cape Girardeau County in favor of respondent upon a petition which alleged that a credit report issued by respondent contained a false statement that the appellants had filed for bankruptcy.

The Court of Appeals, Eastern District, reversed the judgment but because of the importance of the issues and for the purpose of reexamining existing law and the MAI 3d instructions, transferred the cause to the Supreme Court pursuant to Mo Const. art. V, § 10. Our review is the same as if on original appeal.


Appellants claimed that a credit report prepared and issued by respondent credit reporting agency to a customer was libelous because it falsely reported that appellants had filed for bankruptcy. Respondent issued the credit report to a financial institution for purposes of determining if appellants, who operated a home construction business, could convey good title to a house. Appellants offered the following jury instructions relating to the credit report.


Your verdict must be for plaintiffs if you believe:

First, defendant published a credit report containing the statement that plaintiffs had jointly filed bankruptcy, and

Second, such statement tended to deprive the plaintiffs of the benefit of public confidence and social assocations, and

Third, such statement was read by Ken Hayden and also read and heard by other creditors, suppliers, business associates and acquaintances of plaintiffs', and

Fourth, plaintiffs' reputation was thereby damaged.

Patterned after MAI 23.06(1)

Offered by Plaintiffs

McDowell v. Credit Bureaus

Also patterned after

Dun & Bradstreet, Inc., v.

Greenmoss Builders, Inc.

53 LW 4866 (1985); --- U.S.S.Ct. ---- (1985)

(Verdict Director)


Your verdict must be for plaintiff if you believe:

First, defendant published a credit report and/or credit bulletins containing the statement plaintiffs were bankrupt, and

Second, Defendant was at fault in publishing such statement, and

Third, such statement tended to deprive the plaintiff of the benefit of public confidence and social associations, and

Fourth, such statement was read by members of the public, and

Fifth, Plaintiffs' reputations were thereby damaged.


If you find the issues in favor of plaintiffs, then you must award plaintiffs such sum as you believe will fairly and justly compensate plaintiffs for any damages you believe they sustained and are reasonably certain to sustain in the future as a direct result of the publishing of the false credit report and/or false credit bulletins stating the plaintiffs had filed for bankruptcy as mentioned in the evidence.

If you find the issues in favor of plaintiffs, and if you believe that defendant published the false credit report and/or false credit bulletins with knowledge that it was false or with reckless disregard for whether it was true, then in addition to any damages to which you find plaintiffs entitled under the foregoing paragraph, you may award plaintiffs an additional amount as punitive damages in such sum as you believe will serve to punish defendant and to deter it and others from like conduct.

The trial court found that respondent was entitled to a qualified privilege. If the qualified privilege applies, the plaintiff must then prove that the statement was made "with knowledge that it was false, or with reckless disregard for whether it was true or false at a time when defendant had serious doubt as to whether it was true." MAI 23.06(2). Appellants' instructions did not conform to MAI 23.06(2) and the trial court refused instructions B, C, and D.


Appellants claim the trial court erred in refusing to instruct the jury on the credit report without submitting the defense of qualified privilege. Appellants claim that current Missouri Approved Instructions incorporate federal constitutional principles which no longer apply in a libel case in which a private plaintiff sues non-media defendant regarding a matter of private concern. Appellants also argue that the qualified privilege should be abrogated because the proving of malice is too confusing and onerous.

A communication is held to be qualifiedly privileged when it is made in good faith upon any subject-matter in which the person making the communication has an interest or in reference to which he has a duty, and to a person having a corresponding interest or duty, although it contains matter which, without such privilege, would be actionable. Upon such occasion and under such circumstances, although the matter communicated is defamatory and false, the law will not infer malice, but the existence thereof must be shown by some evidence beyond the falsity of the statements communicated. * * *

Estes v. Lawton-Byrne-Bruner Insurance Agency Co., 437 S.W.2d 685, 690 (Mo.App.1969) (citations omitted). A qualified privilege has been applied to credit reporting agencies, or mercantile agencies, if the agency communication is made to a subscriber having an interest in the financial position of that business or individual. Mitchell v. Bradstreet Co., 116 Mo. 226, 22 S.W. 358, 360 (1893); Minter v. Bradstreet Co., 174 Mo. 444, 73 S.W. 668 (1903); Annotation, Libel and the Slander Report of a Mercantile Agency as Privileged, 30 A.L.R.2d 776 (1953); Smith, Conditional Privilege for Mercantile Agencies, 14 Colum.L.Rev. 187 (1914). At common law, to overcome the qualified privilege the plaintiff had to prove malice-in-fact "that is, that the defendant was actuated by ill-will in what he did and said with a design to causelessly or wantonly injure the plaintiff." M. Newell, Slander and Libel, § 277 (4th ed. 1924). In Minter, this Court stated that a plaintiff had to prove malice, which meant "that the report in question was prepared and published, not in good faith, but with an intent to injure plaintiffs, or with a willful and wanton neglect of the rights and interest of the plaintiffs." Minter, 73 S.W. at 676, 683. Merely proving negligence does not satisfy the malice requirement because negligence does not constitute willfullness, reckless disregard of others' rights or actual presence of an improper motive to injure. Estes, 437 S.W.2d at 693.

The Missouri Supreme Court Committee on Jury Instructions incorporated this definition of malice in MAI 23.06(1964) which required paragraph Fourth to be used if the qualified privilege was raised "that such statement was [written] [printed] [knowing it to be false] or [without knowing whether it was true or false in reckless disregard for the plaintiffs rights], and with the intent to damage the plaintiff." Current Missouri approved jury instructions require that in a libel case, if the court determines that a qualified privilege applies, MAI 23.06(2) must be used. MAI 23.06(2) instructs the jury that a plaintiff must prove that the defendant published the statement "with the knowledge that it was false, or with reckless disregard for whether it was true or false at a time when defendant had serious doubt as to whether it was true." Appellants claim this instruction incorporates federal constitutional principles that are no longer applicable in this case. Appellants rely on Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 105 S.Ct. 2939, 86 L.Ed.2d 593 (1985).

In Greenmoss, the plaintiff sued a credit reporting agency for incorrectly reporting that plaintiff filed for bankruptcy and other gross misrepresentations of financial information. Greenmoss, 472 U.S. at 751, 105 S.Ct. at 2941. The report was sent to five subscribers who were required to keep the information confidential. Id. Vermont law, applicable in Greenmoss, did not have a qualified privilege for credit reporting agencies. Greenmoss Builders, Inc. v. Dun & Bradstreet, Inc., 143 Vt. 66, 461 A.2d 414, 419 (1983). The trial court ordered a new trial because the instructions did not satisfy the standard set forth in Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974). The issue before the Court was whether Greenmoss had to prove malice to recover presumed and punitive damages when the subject matter of the communication was of a private concern. The jury found for the plaintiff and awarded presumed and punitive damages, without finding malice. Id. 472 U.S. at 752, 105 S.Ct. at 2942. The opinion by Justice Powell stated "that permitting recovery of presumed and punitive damages in defamation cases absent a showing of 'actual malice' does not violate the First Amendment when the statements do not involve matters of public concern." Id. at 763, 105 S.Ct. at 2948. The Greenmoss decision does not mandate that we abrogate the qualified privilege for credit reporting agencies.

Using MAI 23.06(2) does not necessarily mean that appellants' burden of proof was based on constitutional principles. In Snodgrass v. Headco Industries, Inc., 640 S.W.2d 147 (Mo.App.1982), the court was confronted with a similar argument. The defendant in a slander suit complained that MAI 23.10(2) (an instruction similar to MAI 23.06(2)) utilized language from New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), which the defendant claimed was improper definition for actual malice. Id. at 154. The court noted that there was considerable confusion over the proper terminology regarding the type of...

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