Schier v. Denny

• Decision Date: 07 February 1961
• Citation: 107 N.W.2d 611,12 Wis.2d 544
• Parties: William R. SCHIER d/b/a Schier Real Estate Co., Respondent, v. William A. DENNY, Appellant.
• Court: Wisconsin Supreme Court

Page 611

107 N.W.2d 611

12 Wis.2d 544

William R. SCHIER d/b/a Schier Real Estate Co., Respondent, v. William A. DENNY, Appellant.

Supreme Court of Wisconsin.

Feb. 7, 1961.

John F. Friedl, Wauwatosa, for appellant.

Wiernick & Zurlo, Milwaukee, Clinton A. Boone, Jr., Milwaukee, of counsel, for respondent.

CURRIE, Justice.

This action was before us on a prior occasion, and our opinion therein is reported in Schier v. Denny, 1960, 9 Wis.2d 340, 101 N.W.2d 35. On such former appeal the principal issue was whether an action for malicious prosecution may be grounded upon a proceeding instituted before an administrative agency. We held that it may. Our conclusion in this respect is well buttressed by respectable authority. ¹ However, we also determined on such prior appeal that the original complaint of the plaintiff failed to state a cause of action because it did not allege (9 Wis.2d at page 345, 101 N.W.2d at page 37) 'interference with either the plaintiff's person or his property inflicting special damages to him.'

Upon remand to the circuit court, that court granted to the plaintiff the privilege of pleading over. The plaintiff availed himself of such privilege and served and filed the amended complaint which is now before us on this appeal. The sole question which now confronts us is whether such amended complaint alleges the type of special damages which are necessary in order that a cause of action be stated in an action for malicious prosecution grounded upon a prior civil proceeding before an administrative agency.

We pointed out in our recent opinion in Novick v. Becker, 1958, 4 Wis.2d 432, 437, 90 N.W.2d 620, that the courts of this country are divided on the issue, of whether there must have been interference with the person or property of the plaintiff in the prior civil suit, in order for the plaintiff to successfully maintain an action for malicious prosecution. Wisconsin is one of the states that does require the plaintiff in such an action for malicious prosecution to allege and prove special damages arising from the interference with his person or property by the prior civil suit.

The great weight of authority is to the effect that the proceedings before administrative agencies are absolutely privileged. The New Jersey court so held in an action instituted for libel and malicious interference with business grounded on a prior proceeding instituted by the defendant before the New Jersey Director of Milk Industry to determine whether the plaintiff's dairymen's license should be revoked. Rainier's Dairies v. Raritan Valley Farms, 1955, 19 N.J. 552, 117 A.2d 889. We quote from the opinion in that case as follows (117 A.2d at page 892):

'Although there is some diversity of opinion, most courts recognize that the persuasive social considerations underlying the grant of absolute privilege or immunity to participants in judicial proceedings are equally applicable to quasi-judicial proceedings of the nature presented in the instant matter; indeed there is much to be said for the view that their force is even greater where, as here, the proceeding was not merely designed to determine private issues between private parties but was primarily designed to ascertain whether important departmental regulations which were promulgated in the public interest were being violated. See Parker v. Kirkland, 298 Ill.App. 340, 18 N.E.2d 709 (App.Ct.1939); Shummway v. Warrick, 108 Neb. 652, 189 N.W. 301 (Sup.Ct.1922); White v. United Mills Co., 240 Mo.App. 443, 208 S.W.2d 803 (Ct.App.1948). Cf. Prosser, supra, 826: Note, Defamation--Absolute Privilege in Administrative Proceedings, 97 U.Pa.L.Rev. 877 (1949); 20 U.Chi.L.Rev. 677, 683 (1953); 13 Mo.L.Rev. 320 (1948).'

To permit the plaintiff in the instant action of malicious prosecution to recover for damages sustained by reason of injury to his reputation, either as a person or as a real estate broker, as a result of anything contained in the defendant's complaint to the Real Estate Brokers' Board, or in consequence of defendant's testimony given at the hearing conducted by such board, would circumvent the privileged character thereof and render such privilege valueless. This is the view voiced by the Iowa court in Aalfs v. Aalfs, 1954, 246 Iowa 158, 66 N.W.2d 121, 123, wherein the court stated:

'Indeed, it is an anomaly to say that no action will lie for malicious statements contained in a pleading in a civil suit while at the same time permitting an action for malicious prosecution of the suit in which such statements were the gravamen, or at least a substantial and material part of the complaint. Such a rule would in effect destroy the absolute privilege against actions for libel because of charges made in a civil suit.'

While the action in Aalfs v. Aalfs, supra, grew out of an ordinary civil suit and not a proceeding before an administrative agency, the principle enunciated therein is equally applicable to both. This rules out the $10,000 damages alleged by the plaintiff in paragraph 9 of the instant amended complaint for injury to reputation. Furthermore, such alleged damages do not constitute 'special damages' in the sense in which we employed such term in our former opinion on the prior appeal in this action, and in Novick v. Becker, supra.

This leaves for determination the question of whether the damages alleged in paragraphs 7 and 8 of the amended complaint do constitute such special damages. The test is whether the facts alleged in such two paragraphs disclose an interference with property. The particular damages alleged by such two paragraphs are for advertising expense incurred by the plaintiff in seeking new employees to take the place of employees who quit because of the filing by the defendant of his complaint with the board, and for loss of earnings which resulted from such original employees quitting. Such allegations do not spell out indirect damages sustained by the plaintiff's real estate broker's business as a result of loss of reputation growing out of the filing of such complaint, but more direct damages arising from the quitting of employment by employees upon the filing of the complaint.

To pinpoint the issue, can there be an interference with property, which will support an action for malicious prosecution growing out of charges filed with an administrative agency, where the agency itself does nothing that directly affects the plaintiff's business outside of conducting a hearing? We do not deem that the answer is one to be derived from dictionary definitions, but rather on the basis of choice governed by considerations of public policy. In so doing, we are confronted with two competing and conflicting policies of the law. One is that a remedy should be provided for every wrong, and that no one should be permitted to injure the means of livelihood of another, by making false and malicious charges without probable cause before an administrative agency, without being called upon to respond in damages therefor. The second is that no one should be dissuaded from filing meritorious charges of improper conduct against another with an administrative agency, that is charged with the regulation of business or professional activites in the field in which such conduct lies, by fear that he will be subjected to possible suit for the payment of damages, if the agency should decide the issue in favor of the party complained against. Such administrative agencies have been created to protect the public interest, and it will be the public who will be the losers if justified complaints are not made known to the agency for fear of incurring liability arising by...