Phillips v. Murchison

• Decision Date: 23 August 1967
• Docket Number: No. 257,Docket 30615.,257
• Citation: 383 F.2d 370
• Parties: Randolph PHILLIPS, Plaintiff-Appellant, v. John D. MURCHISON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

383 F.2d 370 (1967)

Randolph PHILLIPS, Plaintiff-Appellant, v. John D. MURCHISON, Defendant-Appellee.

No. 257, Docket 30615.

United States Court of Appeals Second Circuit.

Argued December 15, 1966.

Decided August 23, 1967.

Randolph Phillips, pro se.

Stuart N. Updike, Townley, Updike, Carter & Rodgers, J. Howard Carter, Lee W. Meyer, Ronald S. Daniels, Anson M. Keller, New York City, for defendant-appellee.

Before WATERMAN, MOORE and FEINBERG, Circuit Judges.

PER CURIAM:

Appellant, who commenced this diversity action in the United States District Court for the Southern District of New York, alleging he had suffered defamation and other wrongs at the hands of the defendant, appeals from orders adverse to him entered below by Judge Dawson and by Chief Judge Ryan. His amended and supplemental complaint contains fourteen counts. Judge Dawson dismissed counts 1 through 5, and counts 8, 13, and 14, as failing to state claims or causes of action upon which relief could be granted.

Appellant has taken no appeal from the dismissal of two of these counts, counts 4 and 5.

Defendant-appellee Murchison some months later moved for summary judgment in his favor and, upon consideration of the motion, Chief Judge Ryan granted a final appealable judgment for appellee. He did not disturb Judge Dawson's disposition of the counts that Judge Dawson had dismissed and he dismissed the remaining six counts, counts 6, 7, 9, 10, 11, and 12. Thereafter appellant timely appealed these determinations (except from the dismissal of counts 4 and 5).

We of the majority are in complete agreement with the position taken by our brother Moore in his dissenting opinion that the dismissal orders entered below as to counts 3, 6, 7, 8, 9, 10, 11, 13, and 14 should be affirmed. Moreover, we of the majority do not cavil with the statement of facts underlying these proceedings and the factual references to the history of the Alleghany litigation as he has set them forth, and therefore we do not find it necessary to discuss for ourselves that dramatic backdrop to the Phillips action.

We of the majority consider that we are required to hold that counts 1, 2, and 12 are properly pleaded, and that they set forth claims upon which relief could be granted.

Succinctly stated, it is our understanding that under the latest New York state judicial pronouncements made in Williams v. Williams, 27 A.D.2d 550, 275 N.Y.S.2d 425 (2d Dep't 1966), and in Chappelle v. Gross, 26 A.D.2d 340, 274 N.Y.S.2d 555 (1st Dep't 1966), decisions handed down subsequent to the orders appealed from here, those orders as to counts 1, 2, and 12 must now be reversed. Our brother Moore distinguishes these cases and relies upon New York trial bench decisions by New York State Justices Streit and Silverman in a collateral action brought by Phillips in the New York courts. Portions of these decisions are quoted in the dissenting opinion.

It would seem that these decisions by Justices Streit and Silverman handed down in the action Phillips brought in the New York courts are in line with the traditional New York law relative to allegations which must be set forth in complaints seeking damages for malicious prosecution and abuse of process, but the two recent Appellate Division decisions indicate a change in the rule.

In Chappelle v. Gross, supra, the court dividing 3-2 held that a complaint alleging that "the institution of the suit, with its accompanying lis pendens, was willful, malicious and without probable cause, with intent to injure the plaintiffs and to prevent them from conveying title to others with whom plaintiffs had a valid written contract of sale" was sufficient to survive a motion to dismiss. The lis pendens is a provisional remedy but a very mild one which affords little interference with person or property compared to arrest, attachment, etc., and the case thus seems to be a weakening of the requirements of interference with person or property.

Soon after the Chappelle case was decided by the First Department, the Second Department handed down the decision upon which Phillips heavily relies, Williams v. Williams, supra. In that case, also by a divided court, 3-2, the court upheld a complaint alleging that an action was instituted "not with the intention of prosecuting it as a lawsuit, but solely for the purpose of ruining plaintiff's business reputation * * *" despite the absence of any allegation of interference with plaintiff's person or property. The case is also important here because it draws the distinction, a distinction not apparent on the face of the New York Civil Rights Law, McKinney's Consol.Laws, c. 6, § 74, between, on the one hand, a litigant's publication of a complaint to news media which media may if they wish abstract a true and fair report for further news publication, and, on the other, his direct publication of a complaint to private individuals.

Applying the principles of the Williams case to the various counts of Phillips's complaint, it is clear to us that counts 1 and 2 must be upheld. The allegations made by Phillips in counts 1 and 2 of his amended and supplemental complaint are not dissimilar to those alleged in Williams v. Williams, supra.

The court in Williams described the plaintiff's allegations as follows:

Liberally construed, the first cause of action alleges that defendant Robert W. Williams caused a corporation to institute a false, defamatory action against plaintiff, not with the intention of prosecuting it as a lawsuit, but solely for the purpose of ruining plaintiff\'s business reputation by widespread publication of the accusations made against plaintiff in that action; and that both defendants accomplished such improper purpose by deliberately and maliciously mailing copies of the defamatory complaint to many others in plaintiff\'s trade. 27 A.D.2d at 550, 275 N.Y.S.2d at 426.

It held that these allegations sufficiently pleaded a cause of action for abuse of process or, if not abuse of process, at least "a cognizable tort for which the law will provide a remedy." 27 A.D.2d at 550, 275 N.Y.S.2d at 426.

Counts 1 and 2 of Phillips's complaint allege, inter alia, that one Jesse Holland, acting as an agent of defendant John D. Murchison, filed a verified complaint in the name of plaintiffs who did not know anything about the subject matter of the action, and that the complaint charged Phillips with "perpetrating fraudulent and conspiratorial acts" with regard to the settlement of two derivative actions, involving Alleghany Corporation, that the complaint was sham (and indeed was subsequently stricken as such in a reported decision of the District Court for the Southern District of New York, Freeman v. Kirby, 27 F.R.D. 395 (SDNY 1961)), that it was filed "in furtherance of a conspiracy maliciously to use the process of this Court * * *" to injure Phillips, and that the contents of the complaint were published to various news media by Holland. Count 1 states that these acts constitute a malicious use of process, and count 2 states that they constitute an abuse of process.

As in Williams, these allegations sufficiently plead abuse of process or some other tort because they charge the "misuse of legal process to accomplish an improper, collateral purpose (citing cases)." 27 A.D.2d at 550, 275 N.Y.S.2d at 426. Inasmuch as that case, the best available current authority on New York law, holds that an interference with a plaintiff's person or property is not a necessary allegation in an abuse of process or malicious prosecution complaint, counts 1 and 2 state a cause of action under New York law.

As we have stated, the court is unanimous that counts 6, 7, 9, 10, and 11 were properly dismissed. They all involve the publication of the contents of various complaints to various news media, and New York Civil Rights Law § 74 is a good defense to such a situation. Lewis v. Chemical Foundation, Inc., 262 N.Y. 489, 188 N.E. 33 (1933); Oglesby v. Cranwell, 250 App.Div. 720, 293 N.Y.S. 67 (2d Dep't 1937). Count 12, on the other hand, involved publication of the complaint directly to named individuals, not news media, and we of the majority hold that it states a good cause of action.

The court in Williams held that the allegations set forth supra were not insufficient as a matter of pleading, before the defendants' answer, to support a claim for libel because the allegations indicated "there was never any `fair and true report' of the defamatory action by disinterested outsiders, but only the primary and sole publication of it by defendants' malicious mailing, to numerous persons in the trade, of the complaint * * *." 27 A.D.2d at 551, 275 N.Y.S. 2d at 427.

Count 12 of Phillips's complaint alleges, inter alia, that Murchison mailed copies of the complaint in an action by Murchison against Phillips and others to various named individuals in Minnesota, Ohio, Illinois, Delaware, and Canada and that the allegations in the complaint were "false, malicious, and defamatory."

We are of the opinion that under Williams this allegation sets forth a pleaded cause of action for libel. It is true that in other counts Phillips charges Murchison with causing similar information to be published in various newspapers so that the sole alleged publication of the material was not limited to individual persons, as in Williams. However, the Williams court could not have intended to allow a defendant, who has brought a lawsuit for "an improper, collateral purpose," to insulate himself from liability for his direct publication of a libel to individual persons by the fact that he also made the statement available to the press.

We recognize that the Chappelle and Williams decisions upon which we base reversal were by intermediate, not final, state appellate courts, both of which were divided 3-2. However, making our best "estimate" of "what the state court would rule to be its law", Bernhardt v. Polygraphic Co., 350 U.S. 198, 209, 76 S.Ct. 273, 279, 100...