King v. Patterson , 49 N.J.L. 417 ( 1887 )

The opinion of the court was delivered by

Depue, J.

Defamatory words uttered in a privileged communication are not actionable unless there be proof of actual malice. If such words are uttered bona fide on a privileged occasion, in an honest belief that they are true, the party injured is remediless. Spill v. Maule, L. R., 4 Exch. 232; Clark v. Molyneux, 3 Q. B. Div. 237. A wrong or malicious motive is essential to the action where the communication is privileged.

On the other hand, where the publication imputes a crime, so as to be actionable per se, or is actionable only on averment and proof of special damages, if the publication is not justified by proof of its truth or by the privileged occasion of publication, the law conclusively presumes malice such as is essential to the action. In such cases good faith and an honest belief in the truth of the publication will be no defence. The absence of a malicious motive may protect against exemplary damages, but will not bar the action. In a legal sense, malice, as an ingredient of actions for slander or libel, signifies nothing more than a wrongful act done intentionally, without just cause or excuse. Cooley on Torts 209, and note. A defamatory publication, under the pretext of a privileged communication, where the privilege does not exist, is a publication without just cause or excuse, and in a legal sense malicious and therefore actionable, though it be made without a malicious motive.

The burden of proving that the occasion of publication was privileged is on the defendant. The issue whether the words were published from a malicious motive, so as to take from them the protection of the occasion, arises only when it has been shown that the occasion of speaking or publishing is one that is privileged. Where the occasion is privileged it is for the plaintiff to establish that the statements complained of were made from an indirect or improper motive, and not for a reason which would otherwise render them privileged. Clark v. Molyneux, supra; Pollock on Torts 227-234.

The fundamental question in this case, upon which the issue-hinges, is whether the notification sheet of November 5th, 1884, containing the false statement on which the action is founded, was published and issued under such circumstances- and in such a manner as to bring it within the class of communications which the law denominates privileged communications.

The occasions which give rise to the privilege of speaking or publishing words which otherwise would be defamatory and actionable are various. Thus, memorials to officers of state respecting the conduct of magistrates and officers, comments by electors upon the character of candidates for office, communications in matters of public interest in which the public generally is concerned, communications in the interest of third persons or for the protection of the party’s own interest, communications respecting the character of servants or the credit and responsibility of tradesmen, or made in the performance of social, moral or legal duties, come within the class of privileged communications. Whether the privilege is available as a defence depends upon the circumstances of the particular case — the situation of the parties, the persons to whom, the-circumstances under which, and the manner in which the communication was made. A publication which in one case would be justifiable, in another case would be without justification. A criticism of the public acts of a candidate for office-may be inserted in a public newspaper or be proclaimed by a circular, but such publicity given to comments derogatory to the character of a servant or to the financial standing of a trader would be illegal. A person, with a view of obtaining information on a subject in which he has a personal interest, or in offering a reward for bills of exchange lost out of his possession, may in some cases justifiably insert in a newspaper an advertisement containing imputations upon the character of others, as in Delany v. Jones, 4 Esp. 191, and Finden v. Westlake, 1 Moody & M. 461. He may justifiably advertise in that public manner the discharge of an agent whose employment had been that of a general collection agent, as in Hatch v. Lane, 105 Mass. 394, but such publicity to the discharge of his cook or his butler would be without justification. In some instances a voluntary imparting of information will be justified; in other cases the privilege applies only to information in response to inquiries. The subject may be one that is privileged, and a communication on that subject be unprivileged if the restraints and qualifications imposed by law upon the publicity to be given the communication be not observed. If such restraints and qualifications are disregarded, the communication is unprivileged and actionable, though made from the best of motives. In such cases good faith and honest belief will be no defence. The act of communicating defamatory matter to persons with respect to whom there is no privilege is an act without legal justification or excuse, and therefore actionable.

When the restraints and qualifications imposed by law upon the publicity to be given to the publication are shown to have been observed, it is then, as was said by the court in Laughton v. Bishop of Sodor and Man, L. R., 4 P. C. 509, “ all we have to examine is whether the defendant stated no more than he believed or might reasonably believe; if he stated no more than this he is not liable.” Expressions of similar import are frequent in judicial opinions, but they have uniformly been preceded or accompanied by a judicial determination that the manner of publication was such as to make the communication privileged. No judicial precedent has ever treated good faith and honest belief, standing alone, as a justification of defamatory words.

The plaintiff was engaged in the retail clothing business, at Red Bank, in the county of Monmouth. The defendants conduct a mercantile agency in the city of New York. Their business consists in collecting information as to the credit and financial standing of dealers throughout the country. Pour .times a year they publish a book of ratings called the “ reference book,” and twice in each week a notification sheet called the “ mercantile agency notification sheet.” In the notification sheet of November 5th, 1884, there was published this information: “ New Jersey. Red Bank. Patterson, Emma. Chattel mortgage, Samuel Ludlow, $1385. Clothing.” The-publication was false, and for the injury to the plaintiff’s business occasioned by it this suit was brought.

The suit is an action by a trader for a false statement concerning her credit, and the defence that the publication was-privileged must be decided upon those legal rules, that give a privilege to communications of that character.

The trial judge charged that a communication made bona fide upon any subject matter in which the party communicating has an interest, or in reference to which he has a duty, is-privileged if made to a person having a corresponding interest, or duty, although it may contain criminatory matter, which, without this privilege, would be slanderous or libelous and actionable.

This instruction was taken from the opinion of the Queen’s Bench, in Harrison v. Bush, 5 El. & B. 344. It conforms to the rule adopted in Whiteley v. Adams, 15 C. B. (N. S.) 392, and in Laughton v. Bishop of Sodor and Man, L. R., 4 P. C. 495, in every respect material to this suit, and accords with the decision of the Court of Exchequer in Toogood v. Spyring, 1 C., M. & R. 181. In the latter case the defendant, a tenant of the Earl of Devon, required some work to be done on the premises occupied by him, and the plaintiff, who was generally employed by Brinsdon, the Earl’s agent, as a journeyman, was sent by him to do the work. He did it, but in a negligent manner, and during the progress of the work became intoxicated, and some circumstances occurred which induced the plaintiff to believe that he had broken open the cellar door, and so obtained access to his cider. The court held that the communication of these facts to Brinsdon, the the agent of the earl, who, in virtue of his employment, had a duty to perform in the premises, was privileged, but that a. communication at another time to one Taylor, a third person, who had no interest in the subject matter, and no duty to perform in reference to it, was not privileged. The judgment of the court in Toogood v. Spyring, sanctions the rule adopted by the trial judge in this case.

The defendants were engaged of their own volition and for their own profit in the business of collecting and disseminating information as to the character, credit and pecuniary responsibility of traders throughout the United States. Their course of business was to transmit a copy of the record book and the semi-weekly notification sheet, containing the information they collected, to each of their subscribers, who paid the required annual subscription and signed a contract to hold such communications as confidential, without regard to the existence or non-existence of an interest by the subscribers in the information communicated. The number of subscribers to whom the record book and notification sheets were sent does not appear in the case. Mr. Dun, the principal proprietor, testified that it was impossible for him to say how many copies were issued, as there were a number of branch offices, and of the number of their subscribers he had no knowledge. Enough appeared to show that the defendants’ business of collecting and disseminating information is extensive, and that the number of subscribers to whom such information is communicated is very large. It appeared that one Myers, a creditor of the plaintiff, saw the notification sheet of November 5th, 1884, in the hands of Lisberger & "Weiss, merchants doing business in Philadelphia, and that Lyons, another creditor, saw another copy of it on the desk of Simons & Co., in New York city. In consequence of the information contained in this sheet, Myers and Lyons went to Red Bank and demanded payment or security for their debts. The plaintiff’s credit was thereby destroyed, and her business was broken up. Myers and Lyons were not subscribers of the defendants. Lisberger & Weiss had, some two years before, sold goods to the plaintiff, but the account was closed at that time. It did not appear that Simon & Co. ever had dealings with the plaintiff. Neither of these persons had, at the time the sheet was published, any business interest in the credit or financial standing of the plaintiff.

The trial judge applied the rule of law he adopted by an instruction in these words: “ Had, then, Lisberger & Weiss an interest in knowing the financial condition and solvency of the plaintiff? Or had Simon & Co., in New York, such interest? Or had either party — the defendants, or Lisberger & Weiss, or Simon & Co. — a duty with reference to the condition of the business affairs as between themselves ? If they had, then such communication, made bona fide, with the guard by contract and other stipulation between the parties appearing in evidence, would be privileged. If there was no such interest or duty between the defendants and these subscribers, then they may be liable, as the publication was not privileged as to them, or to others who obtained it through them. If a request was made, either express or implied, by Lisberger & Weiss, or by Simon & Co., for such communication as to the plaintiff, then, if they had no interest in the matter, the book or sheet sent to them, or either of them, affecting her credit, would not be privileged. If made without such request, then the communication voluntarily sent by them must be at their risk as to the harm that may be done thereby. I think it is enough to hold, in this case, that the agency has the protection of the privilege in every case where the subscriber has a direct and personal interest in the person who is the subject matter of inquiry, and that in all other cases they must stand as others, on the truthfulness of their reportj and their protection under the contracts with subscribers not to divulge the secrets of their business.”

In this discussion my citations will be limited to such cases as are regarded as leading cases, or are germain to the case before the court, with a view to distinguish or apply such decisions to the case in hand.

In Capital and Counties Bank v. Henty & Sons, 7 App. Cas. 741, the defendants, who were brewers, had printed a circular in these words: “ Messrs. Henty & Sons hereby give notice that they will not receive in payment checks drawn on any of the branches of the Capital and Counties Bank.” This circular they sent by post to persons residing in various places in Sussex and neighboring counties, who were either tenants of or purchasers of beer from the defendants. The circular became known to other persons, and there was a run on the bank. The bank sued Henty & Sons for a libel, with an innuendo that the circular imputed insolvency. It appeared in the case that the practice of the defendants had been to collect from time to time, through their travelers, moneys due from their tenants and customers, and to accept payment by checks on local banks. Among the checks which, in the ordinary course of business, were likely to come into the hands of these persons, and which they might be likely from time to time to offer in payment to the defendants, some might be drawn upon the different branches of the plaintiffs’ bank. The circular, as was said by Lord Selborne, related to the defendants’ mode of conducting business between them and their tenants and customers, as to which it was proper that their debtors should be informed, and as the defendants were entitled to decide for themselves what checks they would accept, or decline from their debtors, such a communication to their tenants and customers, if made bona fide, was privileged. The case, however, was decided in the House of Lords on the question whether the proof was sufficient to sustain the innuendo that the circular imputed insolvency. The court held that the words of the circular, in their natural meaning, were not libelous; that the inference suggested by the innuendo was not the inference which reasonable persons would draw, and that the circumstances attending the publication did not show that the circular had a libelous tendency. Speaking of the fact that some of the persons who received the circular did in fact show it to strangers, Lord Selborne said: “ I do not think that any such communication by them to strangers, unauthorized by the defendants themselves, could properly bo evidence in support of the innuendo.” He added: “ If it had been publicly placarded by the defendants, on the walls of Chichester or other towns, or had been advertised by them in newspapers, or sent by them through the post to persons with whom they had no business relations, this might have been evidence of a malicious intention, beyond what was expressed by the mere words of the document.”

The case cited is distinguished from that in hand in the circumstance that the circular in that case did not bear on its face a construction imputing insolvency, and was sent only to persons having an interest in the subject; whereas in this case the statement in the notification sheet plainly affected the plaintiff’s financial standing, and was sent to all subscribers promiscuously, without regard to their interest in that subject.

In Lawless v. Anglo-Egyptian Oil Co., L. R., 4 Q. B. 262, an action for libel was brought against a corporation for publishing a report made to the company by auditors in their audit of the managers’ account, reflecting upon the plaintiff. The report was submitted at a general meeting of the shareholders of the company, and under a resolution of the meeting was printed and circulated among the shareholders. The court held that inasmuch as it was the interest of all the shareholders to be informed of the report, the printing and suck publication of it were privileged on the ground, as was said by Mellor, J., “ that to print the report was a necessary and reasonable mode of communicating it to all the shareholders, who must be more or less numerous.” It will be observed that the gravamen of the action was the publication to the shareholders, persons immediately interested in the report, and that no other publicity had been given to the defamatory matter except to the printer by whom it had been printed. In P., W. & B. R. R. Co. v. Quigley, 21 How. 202, a report made to stockholders in writing, and printed, with respect to the capacity and skill of one of the company’s employees, the superintendent of the company’s railroad, was held to be a privileged communication; but it was also held that the privilege did not extend to the preservation of the report in a book for distribution among the persons belonging to the corporation or the members of the community.

These cases are simply illustrations of the principle that a communication made upon a subject matter in which the party communicating has a duty is privileged when made to persons having a corresponding interest in it, and they illustrate how carefully the privilege is restricted within the bounds reasonably necessary to effect the communication to the parties actually interested. So strictly is this limitation within reasonable bounds enforced, that in Williamson v. Freer, L. R., 9 C. P. 393, the transmission unnecessarily, by a post-office telegram, of libelous matter which would have been privileged if sent in a sealed letter, was held to avoid the privilege, although the post-office clerks through whose hands it would pass were prohibited, under severe penalties, from disclosing telegrams passing through their hands, the principle of the decision being that publication was thus made to persons in respect of whom there was not any privilege. Pollock on Torts 234.

The defendants’ dissemination of the notification sheets among their subscribers as a class, being intentional and in the regular course of their business as it was conducted, it is not necessary to consider whether Tompson v. Dashwood, 11 Q. B. Div. 43, in which it was held that a communication intended to be made on a privileged occasion was privileged where, by the sender’s negligence in putting letters in wrong envelopes, the communication was sent to a stranger to the occasion, was correctly decided. It will be observed that in Tompson v. Dashwood the misdirected letter was sent to the plaintiff’s brother, and in fact caused no special injury to the plaintiff. It may also be remarked that Mr. Pollock, in his recent Treatise on Torts, disapproves of this case as a decision by no means universally accepted by the profession as good law, and as contrary to the earlier decisions. Pollock on Torts 216, 234. A defendant intends to send a communication derogatory to the plaintiff’s character or circumstances to A, where it would do no harm. By inadvertence he sends it to B, which produces the injury complained of. It is obvious that it would be a plain transgression of legal principle to excuse the act he did because he intended to do an act from which no injury to the plaintiff would have resulted, and thus visit upon an innocent sufferer the consequences of the heedless act of the wrong-doer which occasioned the injury.

I turn now to the judicial precedents directly in point.

In Beardsley v. Tappen the defendant conducted a mercantile agency for furnishing information to subscribers, under rules and regulations for maintaining the personal and confidential character of communications to subscribers similar to those in the defendants’ contract with their subscribers. The plaintiff sued in an action for libel, for communicating false information with respect to the plaintiff’s financial condition. The words in question had been entered in the defendant’s record book by his clerks and had been read by them to clerks of subscribers sent by their employers to make inquiries. The trial judge instructed the jury that no person other than the merchant himself, asking for information, had in law a right to read or hear said words, and that the reading of said words by any person in defendant’s employ, with his permission, or the reading of said words by defendant himself, or by any person in his employ, to the clerk of a merchant subscriber requesting information concerning the plaintiff, was an unlawful publication, not at all within or protected by the rule of law as to privileged communications. The plaintiff having obtained a verdict, Mr. Justice Nelson, in denying a motion for a new trial on the ground of misdirection, held that the principle upon which privileged communications rest imported confidence and secrecy between individuals, and was inconsistent with the idea of a communication made by a society or congregation of persons, or by a private company or a corporate body. The facts and the charge of the trial judge are reported in 1 Am. Lead. Cas. 205, and the opinion of Mr. Justice Nelson in 5 Blatchf. C. C. 497. The judgment was reversed in the Supreme Court of the United States, no opinion having been expressed on this subject.

The charge of the trial judge and the reasoning of Mr. Justice Nelson place unreasonable restrictions upon the doctrine of privileged communications. Agents to collect information, clerks to record it and to communicate it to subscribers, on the one hand, and confidential clerks to receive the information in the interest and by the authority of subscribers, on the other hand, are absolutely necessary to the usefulness, if not the existence, of these institutions. The employment of clerks who obtain thereby such information as their duties, necessitate — like the intervention of the printer where printing a report is, in the judgment of the court, a reasonable method of communicating to a large body of interested persons, as the shareholders of a corporation — does not take from the transaction its character as a privileged communication.

Other cases have placed the subject on more reasonable grounds. In Ormsby v. Douglass, 37 N. Y. 477, the defendant kept a mercantile agency, to obtain information respecting the credit and responsibility of persons in trade, and furnish the same to subscribers. A subscriber who held a note against the plaintiff personally applied at the defendant’s office for information concerning the plaintiff. The record books were examined by the defendant’s clerks, and the information was given. The statement complained of was made orally to one interested in the information, upon personal application at the defendant’s office. The Court of Appeals of New York held the communication to be privileged. On the other hand, the same court held that a communication made by a person engaged in the business of a mercantile agent, to subscribers, which was not confined to such of them as made inquiries of him, but was printed by his procurement and distributed by him to subscribers who had no special interest in being informed of the condition of the plaintiff’s firm, was not privileged. Taylor v. Church, 4 Seld. 452.

The question was again considered in that state, by the new Court of Appeals, in Sunderlin et al. v. Bradstreet, 46 N. Y. 188. The suit was against the proprietors of a mercantile agency. The defendants published a semi-annual volume containing the names of persons and firms doing business in various parts of the United States and Canada, and information in reference to their financial condition, and also a weekly sheet of corrections, which was sent to their subscribers in the city of New York and in the country, by mail. In this weekly sheet they published that the plaintiffs had failed. The publication was false. The question was whether the publication was a privileged communication. Mr. Justice Allen, in the opinion of the court, said: “A communication is privileged within the rule when made, in good faith, in answer to one having an interest in the information sought; and it will be privileged if volunteered, when the party to whom the communication is made has an interest in it, and the party by whom it is made stands in such relation to him as to make it a reasonable duty, or at least proper, that he should give the information. * * * In the case at bar it is not pretended that but few, if any, of the persons to whom the ten thousand copies of the libelous publication were transmitted had any interest in the character or pecuniary responsibility of the plaintiffs, and to those who had no such interest there was no just occasion or propriety in communicating the information. The defendants, in making the communication, assumed the legal responsibility which rests upon all who, without cause, publish defamatory matter of others; that is, of proving the truth of the publication, or responding in damages to the injured party.- The communication of the libel to those not interested in the information was officious and unauthorized, and therefore not protected, although made in the belief of its truth, if it were, in point of fact, false. * * * In those cases in which the publication has been held privileged the courts have held that there was a reasonable occasion or exigency which for the common convenience and welfare of society, fairly warranted the communication as made. But neither the welfare nor convenience of society will be promoted by bringing a publication of matters, false in fact, injuriously affecting the credit and standing of merchants and traders, broadcast through the land, within the protection of privileged communications.” The court held that information communicated, not merely to persons interested in it, but published to all persons who might be subscribers to the scheme of publication, was not privileged.

The decisions in the federal Circuit Courts are in coincidence with those of the courts of New York. Erber v. Dun, 12 Fed. Rep. 526 ; Trussell v. Scarlett, 18 Id. 214; Locke v. Bradstreet Co., 22 Id. 771. Against these authorities I find neither judicial decision nor dictum.

I concur in the result reached in Sunderlin v. Bradstreet, and in the reasoning upon which the judgment was founded. The defendants can claim no additional privilege in virtue of the business in which they are engaged. Their business is a lawful business, but, as was said by the court in Sunderlin v. Bradstreet, “ in its conduct and management it must be subjected to the ordinary rules of law, and its proprietors and managers held to the liability which the law attaches to like acts by others.” The publication of defamatory matter affecting third persons, in a business prosecuted for personal gain, can be tolerated only on grounds of public convenience. The rights of individuals ought not to be made to yield to the exigencies of such a business more than public interests require. Public interests will be adequately conserved by extending the immunity of privileged communications only so far as to embrace communications to subscribers who have a special interest in the information. This restriction lays no unreasonable restraint upon the business of these agencies in collecting and communicating information in the interest of the public. Society is organized and courts are established for the protection of the rights of individuals. Unrestrained by those legal principles which control the acts and conduct of other persons under like circumstances, these agencies, in the vastness of their operations, are capable of becoming instruments of injustice and oppression so grievous that public policy would require their entire suppression.

Nor can the defendants acquire a larger measure of immunity by reason of their contracts with their customers to hold the information ast confidential. The contract of the defendants with their subscribers is inter sese. In fact it affords no protection against injury by false reports. The manner in which these reports are disseminated renders protection to the public under the terms of the subscribers’ contracts a delusion. Each of the subscribers has a printed copy to retain in his possession. Myers testified that although not one of the defendants’ subscribers, he nevertheless had seen their reports twice a week right along — sometimes only once a week and sometime twice a week; that during the last ten years he had seen their notification sheets thousands of times, and that any reputable merchant could get hold of their sheets, whether he is a subscriber or not. Others of the plaintiff’s creditors who were not defendants’ subscribers testified that they had frequently seen the defendants’ notification sheets, and some that they had seen the sheet of November 5th, 1884. The injury to the plaintiff from the false report resulted from the manner in which the defendants disseminated their publications. It has been held that damage occasioned by the unauthorized repetition by a third person of defamatory words uttered orally is too remote to support an action against the original utterer of them, where the words are actionable only by reason of special damage. Ward v. Weeks, 7 Bing. 211. This case and the cognate case of Vicars v. Willcocks have been criticised. 2 Smith’s Lead. Cas. (8th ed.) 552. The principle held in that case, if sound, has never been applied to written or printed libels, nor is it applicable to defamatory matter published in that manner. The correct principle to apply to such publications is that the original publisher is answerable in law for all the consequences of his wrongful act which were reasonably to be foreseen, and which were the result, in the usual order of things, of such wrongful act. Hughes v. McDonough, 14 Vroom 460 ; Pollock on Torts 463.

The rule adopted by the, learned judge, in defining the qualifications and limitations upon publications affecting-credit and financial standing, which would make such publications privileged communications, was correct. His application of the rule to the facts of this case was as favorable to the defendants as they were entitled to have. His ruling with respect to the liability of the defendants for damages resulting from their wrongful acts was also correct.

The other exceptions have been examined. It is sufficient to say we find in them no error which would justify a reversal.

The judgment should be affirmed.