Neigel v. Seaboard Finance Co.

• Decision Date: 14 July 1961
• Docket Number: No. A--885,A--885
• Citation: 173 A.2d 300,68 N.J.Super. 542
• Parties: Eleanor J. NEIGEL, Plaintiff-Appellant, v. SEABOARD FINANCE COMPANY, a Delaware Corporation, and Henry J. Scharff-Defendants-Cross-Appellants.
• Court: New Jersey Superior Court — Appellate Division

Page 542

68 N.J.Super. 542

173 A.2d 300

Eleanor J. NEIGEL, Plaintiff-Appellant, v. SEABOARD FINANCE COMPANY, a Delaware Corporation, and Henry J. Scharff-Defendants-Cross-Appellants.

No. A--885.

Superior Court of New Jersey, Appellate Division.

Argued April 24, 1961.

Decided July 14, 1961.

Paul R. Kramer, Mount Holly, for plaintiff-appellant (Powell & Davis, Mount Holly, attorneys; Paul R. Kramer, Mount Holly, of counsel).

Edwin T. Ferren, III, Camden, for defendants-cross-appellants (Richman & Berry, Camden, attorneys).

Before Judges GOLDMANN, FOLEY and LEWIS.

The opinion of the court was delivered by

LEWIS, J.A.D.

This case emanates from a finance company transaction. An alleged defamatory letter was the basis of a libel action for compensatory and punitive damages, which resulted in a verdict in favor of plaintiff for compensatory damages of $500. The proffered defenses were truth and qualified privilege. A motion for new trial as to damages only was denied. The matter is now before us on cross-appeals.

Plaintiff, Eleanor J. Neigel, was employed as a work order specialist at the McGuire Air Force Base in New Jersey. On September 3, 1957 she and her husband, Charles A. Neigel, borrowed the sum of $304 from the defendant, Seaboard Finance Company, a Delaware Corporation, authorized to do business in the State of New Jersey, under an agreement to repay the loan in 24 monthly installments of $17. each. This was not the first transaction between the parties. As late as December 17, 1958 the Neigels were advised that they were preferred customers and eligible to receive additional loans. Plaintiff and her husband are now divorced; judgment Nisi was entered February 8, 1960 and Final judgment was obtained May 9, 1960.

The wife had separated from her husband in August of 1958 and obtained an agreement from him for the support of their children. The month following their separation (September 1958), plaintiff advised the finance company that she would assume the responsibility for the loan payments. Her conversation was with Henry J. Scharff, the collection manager, a defendant in these proceedings. The regular monthly payments were continued by plaintiff up to and including the month of December 1958. During the latter part of January 1959, plaintiff again called Mr. Scharff and explained to him that her husband had stopped making support payments for their children and, until something could be worked out, she would be late with her payments. Scharff, in his reply, indicated that he was not interested in her problems, he 'just wanted his money.'

Plaintiff's testimony on cross-examination is significant:

'Q. What I am getting at, you told us one of the reasons you discontinued making payments to Seaboard was because your husband discontinued making payments to you. A. I told Mr. Scharff in one of our phone calls if I could pay any way myself, I would, but I couldn't without the support money.'

During the month of February 1959, the defendant Scharff telephoned to the plaintiff at her place of employment 'between four and six' times, the calls becoming increasingly unpleasant. Plaintiff had specifically requested that he not call her at work 'because there were people there and I didn't want everybody to know by business.' She inquired as to why he did not contact her husband and she gave Mr. Scharff his telephone number. She further testified that Scharff advised her that 'he was going to call my job, that I knew what that meant, the consequences.'

On March 4, 1959 the defendat, Henry J. Scharff, sent the following letter to plaintiff's employer:

'Seaboard Finance Company

'402 Trenton Trust Bldg.

'Lic No. 398

'Trenton, N.J.

'March 4, 1959

'Director of Personnel (Civilian)

'McGuire Air Force Base

'Trenton, New Jersey

'Dear Sir:

'We are writing to advise you regarding a situation that exists between your employee Mrs. Eleanor Neigel, and her husband Charles and this corporation.

'On September 3, 1957, we made a loan to Mr. & Mrs. Neigel in the amount of $304.00 to be repaid in twenty-four installments of $17.00 each month. We are sorry to report that this contract has not been kept.

'At the present time Mr. & Mrs. Neigel are having family trouble and it is their belief that since such is the case, they have the right to withhold payments while they continue their family feud.

'We are not trying to use you as a collection agency but neither do we intend to stand idly by and allow these people to use your office as a weapon against us.

'It is our request that you be kind enough to speak with Mrs. Neigel and inform them of the serious consequences that may arise if they continue to neglect this just debt.

'Thank you for your cooperation.

'Best regards,

'Seaboard Finance Company

'/s/ Henry L. Scharff

Collection Manager'

'HLS/gvc This letter was called to the plaintiff's attention by the Acting Personnel Director at her place of employment and was placed in plaintiff's suitability file. Dorothy R. Krehl, chief of the employee utilization branch of the civilian personnel office at the McGuire Air Force Base, testified that the personnel officer, herself, two other employees in her office and the chief of administration had access to the suitability files, and, under cross-examination, she said:

'A suitability file in the Air Force, I think, possibly could render the individual unsuitable for employment, possibly in the future or in certain positions depending upon the nature of the position. We would also use it in connection with any promotion at McGuire Air Force Base itself.'

At the conclusion of the plaintiff's case, the defendant moved for judgment, which motion was denied. The defense rested, without offering any evidence, and again moved for judgment--specifically, that judgment be rendered on behalf of the defendant Seaboard Finance Company maintaining, in substance, that there was no proof in the record that Scharff had the authority, on its behalf, to act as he did. This motion was likewise denied. The case was then permitted to go to the jury, and resulted in a verdict for the plaintiff. The jury awarded compensatory damages in the amount of $500.

The substance of plaintiff's contentions on appeal is that (1) the offensive communication was not privileged and, even if it were, the evidence established malice in fact; (2) defendants did not prove the defense of truth or the defense of privileged communication; (3) the court erred in not admitting evidence as to the financial worth of the defendant Seaboard Finance Company on the issue of punitive damages; and (4) the court improperly instructed the jury on the law respecting 'punitive damages' and 'fair comment.' The defendants, on cross-appeal, argue that the court properly excluded evidence of corporate worth; and that their motion for judgment should have been granted.

I.

Privilege or immunity in the law of defamation is a matter of public policy in furtherance of our democratic and fundamental right of free speech. Coleman v. Newark Morning Ledger Co., 29 N.J. 357, 149 A.2d 193 (1959). It counterbalances the equally basic right to enjoy reputation 'unimpaired by false and defamatory attacks.' Rainier's Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 557, 117 A.2d 889, 891 (1955). Privilege may be absolute or qualified. The distinction is that complete protection is afforded by an absolute privilege, whereas a qualified or conditional privilege is protective only in the absence of ill motive or malice in fact. Ibid; Prosser on Torts (2d ed. 1955), sec. 95, p. 606 et seq.; 1 Harper and James, The Law of Torts, Defamation, sec. 5.21, p. 419 (1956).

In the case before us, the defendants asserted a qualified privilege. To constitute such an immunity, the communication must not only be Bona fide, but the transmitter must have an interest or duty in the subject matter and the addressee must have a corresponding interest or duty. Jorgensen v. Pennsylvania Railroad Co., 25 N.J. 541, 564, 138 A.2d 24, 72 A.L.R.2d 1415 (Sup.Ct.1958); Coleman v. Newark Morning Ledger Co., supra, 29 N.J. at page 375, 149 A.2d at page 203; 1 Harper and James, op. cit. supra, sec. 5.25, p. 435, 439; Prosser, op. cit. supra, sec. 95, p. 606; 3 Restatement, Torts, sec. 595, p. 247 (1938); 33 Am.Jur., Libel and Slander, sec. 128, p. 127; 53 C.J.S. Libel and Slander §§ 89, 107, pp. 143, 184, 185, Vide, reference therein to authorities for statement that: 'Where the communication is made solely for the purpose of compelling the employee to pay a debt due the informant, it is not privileged.' See, also, Finkelstein v. Geismar, 91 N.J.L. 46, 48, 106 A. 209 (Sup.Ct.1917), affirmed 92 N.J.L. 251, 106 A. 209 (E. & A. 1918).

Initially, the defendant has the burden of establishing the occasion for a privileged communication. Coleman v. Newark Morning Ledger Co., supra. But it is basically a question of law for the court to decide, subject to 'the exercise of the jury's traditional function where the facts are in dispute.' Ibid., 29 N.J. at page 376, 149 A.2d at page 203; Swede v. Passaic Daily News, 30 N.J. 320, 153 A.2d 36 (1959); Savage v. Stover, 86 N.J.L. 478, 92 A. 284 (Sup.Ct.1914), affirmed 87 N.J.L. 711, 94 A. 1103 (E. & A. 1915); Rainier's Dairies v. Raritan Valley Farms, Inc., supra; Sokolay v. Edlin, 65 N.J.Super. 112, 124, 167 A.2d 211 (App.Div.1961). Note, 'Policy factors involved in conditional privilege,' 1 Harper and James, op. cit. supra, sec. 5.25, p. 435.

To hold that an employer, with relation to his employee, has an interest or duty corresponding to that of a finance company in the collection of a small loan from the employee would, indeed, stretch the doctrine of qualified privilege to the breaking point. The illustration presented to the jury in the court's instructions was not analogous. The court said, after discussing absolute privilege:

'The other privilege is qualified or privileged--for example, if a prospective employer writes to a...