Tom Olesker's Exciting World of Fashion, Inc. v. Dun & Bradstreet, Inc.

• Decision Date: 19 May 1975
• Docket Number: No. 46554,46554
• Citation: 334 N.E.2d 160,61 Ill.2d 129
• Parties: TOM OLESKER'S EXCITING WORLD OF FASHION, INC., Appellant, v. DUN & BRADSTREET, INC., Appellee.
• Court: Illinois Supreme Court

Page 160

334 N.E.2d 160

61 Ill.2d 129

TOM OLESKER'S EXCITING WORLD OF FASHION, INC., Appellant, v. DUN & BRADSTREET, INC., Appellee.

No. 46554.

Supreme Court of Illinois.

May 19, 1975.

As Modified on Denial of Rehearing Sept. 24, 1975.

Foos & Sexner, Ltd., Chicago (William L. Meyers, Chicago, of counsel), for appellant.

Kirkland & Ellis, Chicago (Don H. Reuben, Lawrence Gunnels, and James C. Munson, Chicago, of counsel), for appellee.

WARD, Justice.

The plaintiff, Tom Olesker's Exciting World of Fashion, Inc., a clothing retailer, on March 3, 1970, filed a complaint in the circuit court of Cook County against the defendant, Dun & Bradstreet, Inc., a national credit reporting agency. The complaint charged that the defendant on January 22, 1969, published a business information sheet, or credit report, which falsely reported the financial state of the plaintiff's business, causing injury to its general and business reputation. The first count of the complaint alleged a malicious publication of the allegedly libelous report, and count II charged the defendant with negligence in preparing and publishing the report. The third count claimed that the publication of the report amounted to a malicious interference with the plaintiff's opportunity to obtain credit and enter into contracts with third persons.

The defendant filed a motion to dismiss the complaint on a number of grounds, including the ground that any cause of action alleged was barred by the one-year statute of limitations for defamation. (Ill.Rev.Stat.1971, ch. 83, par. 14.) The circuit court allowed the motion. The appellate court affirmed the trial court's dismissal of counts I and II of the complaint, holding that the cause of action for libel accrued, if at all, at the time the defendant's credit report was received by its subscribers. Since the complaint itself alleged that date to have been more than one year prior to the filing of the complaint, the appellate court stated that prosecution was barred by the one-year statute of limitations for libel. The appellate court reversed the trial court's holding as to count III on the ground that the count was a civil action with a five-year statute of limitations. (Ill.Rev.Stat.1969, ch. 83, par. 16.) The court remanded to the circuit court and stated that on remand the plaintiff should be allowed leave to amend as to that count. (16 Ill.App.3d 709, 306 N.E.2d 549.) We granted the plaintiff's petition for leave to appeal from the appellate court's judgment as to counts I and II. The defendant then, under Rule 318(a), Ill.Rev.Stat.1973, ch. 110A, § 318(a), asked us to reverse the appellate court's judgment as to count III of the complaint.

Our statute of limitations which relates to suits for defamation provides: 'Actions for slander, libel or for publication of matter violating the right of privacy, shall be commenced within one year next after the cause of action accrued.' Ill.Rev.Stat.1971, ch. 83, par. 14.

It has been generally held that in defamation cases the cause of action accrues and the statute of limitation begins to run on the date of publication of the defamatory material. (Winrod v. Time, Inc., 334 Ill.App. 59, 78 N.E.2d 708; see Wheeler v. Dell Publishing Co. (7th Cir. 1962), 300 F.2d 372; Insull v. New York World-Telegram Corp. (N.D.Ill.1959), 172 F.Supp. 615, aff'd (7th Cir. 1959), 273 F.2d 166; Winrod v. MacFadden Publications, Inc. (7th Cir. 1951), 187 F.2d 180; Bernard Food Industries, Inc. v. Dietene Co. (7th Cir. 1969), 415 F.2d 1279; Annot. (1972), 42 A.L.R.3d 807; 1 Hanson, Libel & Related Torts sec. 154.) However, the holdings as to when publication is considered to occur have not been uniform. (42 A.L.R.3d 807.) The plaintiff contends that the 'discovery rule' should be applied in this case of a credit reporting agency which prohibits distribution of the information in its reports to any person who is not a subscriber to its service. That is, our holding should be that the plaintiff's cause of action did not accrue until it knew or should have known of the defamatory report.

The primary purpose of limitation periods is to require the prosecution of a right of action within a reasonable time to prevent the loss or impairment of available evidence and to discourage delay in the bringing of claims. Order of Railroad Telegraphers v. Railway Express Agency, Inc., 321 U.S. 342, 349, 64 S.Ct. 582, 586, 88 L.Ed. 788, 792; Davis v. Munie, 235 Ill. 620, 621, 85 N.E. 943; Horn v. City of Chicago, 403 Ill. 549, 560, 87 N.E.2d 642; see Note, Developments in the Law--statutes of Limitations, 63 Harv.L.Rev. 1177, 1185 (1950).

The discovery rule was applied by this court in Rozny v. Marnul, 43 Ill.2d 54, 250 N.E.2d 656. The defendant was a surveyor who had made an inaccurate survey for the land developer, from whom the plaintiffs had purchased the real property concerned. The defendant contended that the statute of limitations ran from the time the plat was delivered to the land developer, or at least from the time that the plaintiff relied on the guaranty that had been given the developer by the defendant. The plaintiffs urged that we follow the discovery rule, saying that at the time this court had not examined the considerations relevant in determining when an action 'accrues' as that term is used in various statutes of limitation in Illinois.

In deciding whether to apply the discovery rule, this court, in Rozny, stated what considerations should determine whether the rule would be followed:

'The basic problem is one of balancing the increase in difficulty of proof which accompanies the passage of time against the hardship to the plaintiff who neither knows nor should have known of the existence of his right to sue. There are some actions in which the passage of time, from the instant when the facts giving rise to liability occurred, so greatly increases the problems of proof that it has been deemed necessary to bar plaintiffs who had not become aware of their rights of action within the statutory period as measured from the time such facts occurred. (See Skinner v. Anderson, 38 Ill.2d 455, 458, 231 N.E.2d 588; New Market Poultry Farms, Inc. v. Fellows, 51 N.J. 419, 241 A.2d 633.) But where the passage of time does little to increase the problems of proof, the ends of justice are served by permitting plaintiff to sue within the statutory period computed from the time at which he knew or should have known of the existence of the right to sue. (See Wanless v. Peabody Coal Co., 294 Ill.App. 401, 13 N.E.2d 996; cf. Eichelberger v. Homerding, 317 Ill.App. 125, 45 N.E.2d 493;)' (Rozny v. Marnul, 43 Ill.2d 54, 70, 250 N.E.2d 656, 664.)

See also Prosser, Handbook of the Law of Torts sec. 30 (4th ed. 1971); 21 De Paul L.Rev. 234 (1971); Petersen, The Undiscovered Cause of Action and the Statute of Limitations: A Right Without a Remedy in Illinois, 58 Ill.B.J. 644 (1970).

The year after Rozny was decided this court had before it a case in which the plaintiff alleged that she had been negligently advised that a cancerous condition, which three years later required an amputation, was not malignant. (Lipsey v. Michael Reese Hospital, 46 Ill.2d 32, 262 N.E.2d 450.) The trial court had held that the suit which followed the amputation was barred by the two-year statute of limitations for personal injury. This court, however, followed the discovery rule of Rozny and held that the cause of action did not accrue until the plaintiff first discovered the cancerous condition. It was said:

'After reviewing the decisions on the question we consider that the Limitations Act should not be given the narrow construction which was imposed in Gangloff (v. Apfelbach, 319 Ill.App. 596, 49 N.E.2d 795) and Mosby (v. Michael Reese Hospital, 49 Ill.App.2d 336, 199 N.E.2d 633). Such a construction often brings 'obvious and flagrant injustice.' (Prosser, Law of Torts, (3rd ed. 1964), sec. 30.) We extend the rule of time of discovery followed by us in Rozny and hold that, in medical malpractice cases as this, the cause of action accrues when the person injured learns of his injury or should reasonably have learned of it. In this we join what Prosser had described as a 'wave of decisions' favoring the rule of time of discovery. E.g., Yerzy v. Levine, 108 N.J.Super. 222, 260 A.2d 533; Yoshizaki v. Hilo Hospital, 50 Haw. 150, 433 P.2d 220; Frohs v. Greene (253 Or. 1) 452 P.2d 564; Janisch v. Mullins, 1 Wash.App. 393, 461 P.2d 895 and also see 55 Ia.L.Rev. (1969), 486.' 46 Ill.2d 32, 40, 262 N.E.2d 450, 455.

This court also has applied the discovery rule to a products liability case. In Williams v. Brown Manufacturing Co., 45 Ill.2d 418, 261 N.E.2d 305, an action was brought against a manufacturer alleging injuries from an 'unreasonably dangerous' design in a trenching machine. The opinion followed this court's earlier holdings that 'an action to recover for personal injuries resulting from a sudden traumatic event accrues when plaintiff first knew of his right to sue * * *.' (45 Ill.2d 418, 432, 261 N.E.2d 305, 313.) This court rejected the contention that the statute began to run when the machine left the manufacturer's control. In Berry v. G. D. Searle & Co., 56 Ill.2d 548, 558--559, 309 N.E.2d 550; the plaintiff had suffered a stroke and claimed it was caused by birth control pills she had been taking. We, citing Williams, held that the statute began to run for her action for strict tort liability at the time of the stroke, a traumatic event she unquestionably knew of when it occurred; we did not hold that her cause of action accrued on the date of manufacture, sale, or taking of the pill.

There have been other holdings in Illinois applying the rule of discovery. In Kohler v. Woollen, Brown & Hawkins, 15 Ill.App.3d 455, 460, 304 N.E.2d 677, 680, the court, relying on Rozny and Lipsey, held that 'a cause of action for legal malpractice does not accrue until the client discovers, or should discover, the...