National Refining Co. v. Benzo Gas Motor Fuel Co.

• Decision Date: 23 May 1927
• Docket Number: No. 7563.,7563.
• Citation: 20 F.2d 763
• Parties: NATIONAL REFINING CO. v. BENZO GAS MOTOR FUEL CO.
• Court: U.S. Court of Appeals — Eighth Circuit

20 F.2d 763 (1927)

NATIONAL REFINING CO. v. BENZO GAS MOTOR FUEL CO.^*

No. 7563.

Circuit Court of Appeals, Eighth Circuit.

May 23, 1927.

I. J. Ringolsky, of Kansas City, Mo., T. H. Hogsett, Frank H. Ginn, and W. B. Cockley, all of Cleveland, Ohio, and M. L. Friedman and Wm. G. Boatright, both of Kansas City, Mo. (Tolles, Hogsett & Ginn, of Cleveland, Ohio, Ringolsky, Friedman & Boatright, of Kansas City, Mo. and W. B. Cockley, of Cleveland, Ohio, on the brief), for plaintiff in error.

Blatchford Downing, of Kansas City, Mo. (H. L. McCune and R. B. Caldwell, both of Kansas City, Mo., on the brief), for defendant in error.

Before LEWIS and BOOTH, Circuit Judges, and PHILLIPS, District Judge.

BOOTH, Circuit Judge.

This is a writ of error to a judgment entered after verdict against plaintiff in error, hereafter called defendant. The action was originally brought in the state circuit court of Jackson county, Missouri, and was duly removed to the United States District Court for the Western District of Missouri on the ground of diversity of citizenship. The action was one for damages on account of an alleged libel published by defendant.

The complaint alleged in substance as follows: That plaintiff was, and for several years prior to September 1, 1924, had been, engaged in Jackson county, Missouri, and elsewhere, in the business of producing and selling a motor fuel consisting of a mixture of benzol and gasoline, under the trade-name of "Benzo Gas"; that plaintiff during said times was the only producer and seller of such a mixture in Kansas City and vicinity, and had built up a profitable business therein; that about September 1, 1924, at Kansas City, defendant maliciously published certain false and libelous statements in reference to plaintiff and plaintiff's said product; that the publication was made by distributing to numerous users of motor fuel a leaflet, a copy of which was attached to the complaint (the leaflet is set out in the margin¹); that certain statements therein contained (those inclosed in brackets, except the italicized words, in the marginal leaflet) were false; that the statements were published maliciously by defendant for the purpose of discouraging users and prospective users of plaintiff's product from purchasing and using the same, and for the purpose of injuring plaintiff and its said product, and the reputation they had acquired by reason of the excellence of said product; that by reason of the premises plaintiff had been damaged in its business and reputation and the reputation of its product in the sum of $25,000; and, because the statements were maliciously made, plaintiff was entitled to punitive damages in the further sum of $50,000.

The amended answer alleged the truth of the statements mentioned, and denied the other allegations of the complaint. At the trial plaintiff introduced its evidence and rested. Defendant demurred to the evidence. The demurrer was overruled. Defendant stood on its demurrer, and declined to introduce any evidence, but requested an instruction directing a verdict for defendant. This was refused. The jury returned a verdict of $1 actual damages and $10,000 punitive damages.

The evidence introduced by plaintiff tended to prove the following facts:

Plaintiff owned 4 or 5 filling stations in Kansas City where it sold Benzo Gas; also gasoline, oils, and naptha. It also sold Benzo Gas to upwards of 70 filling stations in and around Kansas City. It made the Benzo Gas which it sold. There was no secret and no patent process in making Benzo Gas. It was simply a mixture of benzol and gasoline in varying proportions, and usually a small quantity of naptha. Benzol is a product ordinarily derived from the distillation of bituminous coal. Such mixtures have been in common use for some years in certain parts of the United States, and are known under various names, such as "Benzoline" and "Benzol Gasal." Plaintiff was the only producer of the product in the vicinity of Kansas City. Defendant was in the business of selling petroleum products, such as gasoline, kerosene, and oils. White Rose gasoline was one of the products. It had refineries in Ohio and Kansas. It did business in upwards of 20 states. Its home office was in Cleveland, Ohio. It was operating at the time of the alleged libel 20 or 30 filling stations in Kansas City.

The leaflet constituting the alleged libel was prepared by the president of defendant company as part of an educational campaign by defendant. About 150,000 of the leaflets were printed. They were distributed by salesmen of the company at the various filling stations of the company in the territory mentioned, including the filling stations at Kansas City. One of the filling stations in that city was just across the street from a Benzo Gas filling station. The statements in the leaflet were composed by the president of defendant company from his own information, derived from forty years experience in the oil business, from talks with automobile drivers, and from reading numerous articles on the effects of the use of benzol and gasoline mixtures in internal combustion engines. He had had no personal experience with benzol or benzol and gasoline blends. Shortly after the leaflet was distributed in Kansas City, plaintiff published an advertisement in one of the city papers, referring to the leaflet, denying its statements, and offering to participate in a test to be proposed by defendant, to determine the truth or falsity of the statements. In default of such a test, a retraction of the statements was demanded. A copy of this advertisement was mailed to the local manager of defendant at Kansas City. No answer was received.

The evidence of plaintiff further tended to prove that the statements above mentioned contained in the leaflet, except possibly the first, were untrue. The assignment of errors covers a number of points, but the ones most strongly stressed by defendant are, (1) that the statements complained of were not libelous per se; (2) that if the statements, though not libelous per se, were nevertheless actionable, yet recovery could be had only by alleging special damages in the complaint and proving the same, neither of which requisites was fulfilled; (3) that a judgment for punitive damages could not stand unless a cause of action was established for actual damages.

The second and third propositions are not seriously contested by plaintiff, if we understand its position; but the first proposition is strenuously denied. The vital question in the case, therefore, is: Were the statements libelous per se? The complaint was evidently drawn on the theory that they were; and such was the contention of plaintiff, both in the court below and in this court.

It is apparent from the statement of facts that the dispute narrows itself down mainly to a discussion of the question: under what circumstances a defamatory publication concerning the goods or product of a vendor or manufacturer may also constitute a libel per se concerning the vendor or manufacturer himself. We shall assume without discussion that a corporation may maintain an action for libel; also that published false statements may constitute libel per se against a corporation. The authorities cited hereafter in which corporations were plaintiffs show that these propositions are no longer open to question.

Furthermore, the legal principles constituting the law of libel are the same whether corporations or individuals are involved. But there are recognized distinctions between the application of those principles to individuals and their application to corporations, growing largely out of the differences between natural and artificial persons. For example, a corporation is incapable of committing certain acts, especially some crimes, which an individual would be capable of committing; and again, a corporation has no merely personal reputation in the sense that an individual has. Libels against a corporation are, therefore, confined to attacks which injure the property, the credit, the business of the corporation. South Hetton Coal Co. v. Northeastern News Ass'n, 9 R. 240; Memphis Tel. Co. v. Cumberland Co. (C. C. A.) 145 F. 904, 906; Security Benefit Ass'n v. Daily News Pub. Co., 299 F. 445 (C. C. A. 8), and cases cited; Erick Bowman Remedy Co. v. Jensen Salsbery Laboratories, 17 F. (2d) 255 (C. C. A. 8).

While the instant case illustrates those distinctions to some extent, yet its determination is not vitally dependent thereon. Defendant contends that the statements in the leaflet do not constitute a libel per se against plaintiff (a) because nowhere in the leaflet is plaintiff mentioned, nor the plaintiff's product, Benzo Gas; (b) because in any event the statements disparage merely the property or product of plaintiff, and not plaintiff itself.

We think there is no merit in the first contention. It is not necessary that the party libelled should be named in the libelous article. Whether an article is of a libelous character per se, and whether it has application to a particular party plaintiff, are entirely 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 proofs supporting proper allegations in the complaint. Those proofs may consist either of the article itself, or of extrinsic evidence. In the case at bar the allegation of the complaint was: "Defendants falsely and maliciously published certain false and libelous printed statements in reference to plaintiff and plaintiff's certain product consisting of a mixture of gasoline and benzol as a motor fuel in the following manner. * * *"

We think this allegation was sufficient in view of section 1263, Revised Statutes of Missouri 1919, which reads as follows: "In an action for libel or slander, it shall not be necessary to state in the petition any extrinsic facts, for the purpose of showing the...