National Refining Co. v. Benzo Gas Motor Fuel Co.

LEWIS, Circuit Judge

(dissenting). The complaint alleges that plaintiff (defendant in error) was on September 1, 1924, and for several years prior thereto had been engaged in business in Jackson County, Missouri, and elsewhere, producing and selling for profit a motor fuel consisting of a. mixture of benzol and gasoline under the trade name of Benzo Gas; that it was the only producer, distributor and seller of said mixture, or any mixture of benzol and gasoline as a motor fuel in Kansas City, Missouri, and vicinity; that it had, because of the merits of said mixture and plaintiff’s efforts and ability, established a large and profitable business therein, which was then steadily increasing; that on or about September 1, 1924, while plaintiff was so engaged in such business, defendant falsely and maliciously published at Kansas City, Missouri, certain false and libelous printed statements in reference to plaintiff and plaintiff’s product, and distributed to numerous users of motor fuel and prospective users thereof printed copies of said libelous publication; that the statements contained in said publication were false and were made for the purpose and with the intent of discouraging users and prospective users of plaintiff’s product from purchasing said product and for the purpose of injuring plaintiff in its reputation, which it had acquired by the excellence and good *772 quality of said product and mixture as a motor fuel. A copy of the alleged libel is attached to the complaint, and the parts thereof relied on as libelous are these:

“ * * * A mixture of benzol and gasoline or a mixture of benzol and kerosene oil is not a proper fuel for an automobile, tractor or truck for the reason that when benzol is ignited by the electric spark, it explodes instantaneously. The entire power of the explosion being instantaneous, it is delivered on one spot of all the bearings in the motor and acts the same as if a sledge hammer were taken and a severe blow delivered on one spot at the rate of from twelve hundred to three thousand sledge hammer blows per minute. The result is that the bearings become egg-shaped, resulting in repairs in the form of new bearings. * * *

“Benzol, or a mixture of benzol and gasoline, or a mixture of benzol and kerosene, causes corrosion and pitting of the cylinders and valves, likewise overheats the engine, causing the valves to become exceedingly hot, necessitating frequent grinding of the valves in order to get proper compression due to the corroding and warping. These mixtures, used in cold weather, cause trouble in the gasoline running from the supply tank to the carburetor. Unmixed benzol starts to flake and congeal at 40 temperature, and if mixed with kerosene oil or gasoline, forms flakes in the small delivery pipe to the carburetor, often causing it to plug up. * * *

“No engineer has designed a motor for burning anything other than gasoline. Therefore, why go contrary and use other fuels for which the motor was not designed?

“Dopes advertised to increase the efficiency of gasoline, to prevent the formation of carbon and other claims are nothing but dopes and should not be used. They are harmful to the motor. They do not increase the efficiency of good gasoline, and even when used with mixtures of gasoline and kerosene or low grade gasolines, they are more harmful than the material used. You can take several different acids and introduce them in a motor, and they will eat the surface of the iron until it is clean and bright, but. they are destroying the motor.”

The pamphlet had a headnote: “This Will Interest You,” and was signed: “The National Refining Company. 42 Years’ Experience.”

Defendant answered, justifying the alleged libel as true in fact.' At the close of plaintiff’s proof defendant demurred to the evidence as insufficient to make a ease, which being overruled, defendant then declined to offer any testimony and the jury took the ease on the plaintiff’s proof and the court’s instructions. Its verdict for plaintiff found that the statements in the pamphlet were false, and that finding is amply supported by the proof. The pamphlet was gotten up by the defendant’s president and was circulated by its employes right at plaintiff’s filling stations. Plaintiff and defendant had filling stations in Kansas City where they dispensed automobile fuel near each. The defendant sold a gasoline which it manufactured and advertised as White Rose. I think there can be no doubt on the record that the publica^ tion was directed at the plaintiff in its business and was intended to injure it in its business.

The principal contention is that the complaint did not state a cause of action because it did not plead special damages nor prove such damages; but there seems to be no doubt that an individual or corporation may be libeled in the way of his or its business and entitled to recover ' general damages therefor. The question here is whether this is that kind of a ease. Newell on Slander and Libel (2d Ed.) says:

“At common law, therefore, an action lies for words which slander a man in his trade, or defame him in an honest calling; as, to say of a merchant or tradesman he is a bankrupt. So to charge a man with deceit in his trade, or other malpractice.” Page 68. “Any written words are libelous which impeach the credit of any merchant or trader by imputing to him bankruptcy, insolvency, or even embarrassment, either past, present or future, or which impute to him fraud, or dishonesty or any mean and dishonorable trickery in the conduct of his business, or which in any other manner are prejudicial to him in the way of his employment or trade. ‘The law has always been very tender of the reputation of tradesmen, and therefore words spoken of them in the way of their trade will bear an action that will not be actionable in the ease of another person.’ ” Page 74. “Defamatory words falsely spoken of a person, which impute to the party unfitness to perform the duties of an office or employment of profit, or the want of integrity in the discharge of the duties of such an office or employment are actionable in themselves without proof of special damages; and so, too, are defamatory words falsely spoken of a party which prejudice such party in his or her profession or trade. Next to imputations which tend to deprive a *773 man of Ms life or liberty, or to exclude Mm from the comforts of society, may be ranked those which affect Mm in his office, profession, or means of livelihood. To enumerate the different decisions upon this subject would be tedious, and to reconcile them impossible; yet they seem to yield a general rule sufficiently simple and .unembarrassed, namely, that words are actionable which directly tend to the prejudice of any one in his office, profession, trade or business. So, if a person carry on any trade recognized by the law, or be engaged in any lawful employment however humble, an action lies for any words which prejudice him in the way of such trade or employment. But the words must relate to his trade or employment and ‘touch’ him therein.” Page 168. “The rule is well settled in the United States that words spoken of a person in his office, business, or employment, imputing a want of integrity, of credit, of common honesty, are actionable without proof of special damages; * * * and generally it may be said of all persons who carry on any trade recognized by law, or are engaged in any lawful employment, however humble, an action lies for any words falsely and maliciously spoken which prejudice them in any way of such trade or employment, provided the words are spoken of and concerning such trade or employment, a.nd ‘touch’ them therein.” Pages 192, 193. “Defamatory words which impute to a person dishonesty and fraud in the conduct of his trade, such as knowingly selling inferior articles as superior, or wilfully adulterating his wares, will be actionable without proof of special damages. * * * If the words merely impugn the goods the plaintiff sells, they are not actionable unless they fall within the rules relating to slander of title; for they are but an attack on a thing, not a person. But often an attack on a commodity may be also an indirect attack upon its vendor; as if fraud or dishonesty be imputed to him in offering it for sale.” Page' 195.

To each of those excerpts from Newell a number of American and British cases are cited in support. That is the rule announced in Burnet v. Wells, 12 Mod. 420, and in Larsen v. Brooklyn Daily Eagle, 165 App. Div. 4 , 150 N. Y. S. 464, cited in the majority opinion here. The Massachusetts Supreme Judicial Court, in Morasse v. Brochu, 151 Mass. 567 , 25 N. E. 74 , 8 L. R. A. 524, 21 Am. St. Rep. 474 , said:

“Many eases turn upon the question whether words spoken of one who has a particular profession or trade touch Mm in it; that is, whether they have such a close reference to such profession or trade that it can be said they are defamatory by means of an imputation upon Mm in that character.”

And in the celebrated English case of Ingram v. Lawson, 6 Bing. N. C. 212, the plaintiff was permitted to recover for libel which consisted of statements that he was about to start on a voyage, carrying freight and passengers, in the vessel Larkins, owned by him, which was unseaworthy and on that account would be overtaken in a calamity. The court sustained the verdict for general damages on the ground that the publication was a libel on the plaintiff in the way of Ms business. Maulé, Erskine, Coltman and Bosanquet all expressed themselves on the point and were in agreement that the imputation on the plaintiff was in his business as a ship owner and master mariner, and not a mere disparagement of the qualities of Ms ship. It was held in White v. Delavan, 17 Wend. (N. Y.) 49, that a publication charging a malster with using filthy and disgusting water in the malting of grains for brewing is libelous, and that an action therefor would be sustained without showing special damages. Likewise in O. & M. Ry. Co. v. Press Publishing Co. (C. C.) 48 F. 206 , Circuit Judge Laeom.be held a publication libelous per se, which stated that over half of the ties in the plaintiff’s roadbed were rotten and that it was dangerous to run trains over them very fast. Judge Lacombe said that the occupation of the plaintiff required a proper, safe and businesslike maintenance and operation of its railroad and that language which charged it with sueh incapacity or neglect in the conduct of that business as to induce sMppers and passengers to refrain from employing the plaintiff ás a common carrier because of their belief in the truthfulness of the false statement, was actionable without proof of special damages.

We approvingly recognized that rule in Victor Safe & Lock Co. v. Deright, 147 F. 211 , 8 Ann. Cas. 809, where we said, in reference to the three eases last cited:

“Such language although relating to property or an article produced, is a libel on the owner or producer because it implies that he is guilty of deceit, or what is more reprehensible, in the conduct of his business.”

In Moore v. Francis, 121 N. Y. 199 , 23 N. E. 1127 , 8 L. R. A. 214, 18 Am. St. Rep. 810 , Justice Andrews, speaking for the court, said:

“Whatever words have a tendency to hurt, or are calculated to prejudice a man *774 who seeks his livelihood by any trade or business, are actionable. Where proved to have been spoken in relation thereto, the action is supported, and unless the defendant shows a lawful excuse, the plaintiff is entitled to recover without allegation or proof of special damag'e, because both the falsity of the words and resulting damage are presumed. * * * The word ‘libel’ as expounded in the cases, is not limited to written or printed words which defame a man, in the ordinary sense, or which impute blame or moral turpitude, or which criticize or censure him. In the case before referred to, words affecting a man injuriously in his trade or occupation, may be libelous, although they convey no imputation upon his character. Words, says Starkie, are libelous if they affect a person in his profession, trade or business, ‘by imputing to him any kind of fraud, dishonesty, misconduct, incapacity, unfitness or want of any necessary qualification in the exercise thereof.’ Starkie, Slander and Libel, § 188. * * * Words, to be actionable on the ground that they affect a man in his trade or occupation, must, as is said, touch him in such trade or occupation; that is, they must be shown, directly or by inference, to have been spoken of him in relation thereto and to be such as would tend to prejudice him therein.”

This case was cited with approval by this court in Davis v. Bakewell, 255 F. 960 , in which the libel relied on was as to the occupation of plaintiff, and special damages were not plead. We held there was a good cause of action.

Again, in Sternberg Mfg. Co. v. Miller, etc., Co., 170 F. 298 , 18 Aim. Cas. 69, we said of the libel:

“It is a charge, too, of that peculiar misconduct which naturally and directly brings down upon the .offender’s business the disapprobation of the public and necessarily entails injurious consequences. It is, therefore, according to well recognized law, actionable per se [citing cases]. Being so actionable, damages ensued as a necessary consequence ; and it was not necessary to plead special damages to constitute a cause of action.”

In Pollard v. Lyon, 91 U. S. 225, 227 ( 23 L. Ed. 308 ), the Supreme Court said:

“Certain words, all admit, are in themselves actionable, because the natural consequence of what they impute to the party is damage, as * * * if they are prejudicial in a pecuniary sense to a person in office or to a person engaged as a livelihood in a profession or trade.”

See, also, International Text Book Co. v. Leader Printing Co. (C. C.) 189 F. 86 .

It seems to me that the controlling inquiry is whether the publication can be reasonably held to have been directed against the plaintiff in the way of its business, rather than only a criticism of Benzo Gas as a thing; and for the purpose of determining that inquiry the facts, which support the allegar tions of the complaint, show the circumstances under which the publication was made, and to me they seem convincing that it was directed against the plaintiff in the way of its business. Their effect would naturally discourage the purchase and use of plaintiff’s product by those into whose hands the pamphlet might come; and the plaintiff was as clearly pointed out under the circumstances as it would have been had it been named therein. The president of the defendant company, who prepared the pamphlet, and its agents who distributed it, were not acting as philanthropists or public benefactors. The plaintiff and defendant were rivals and competitors in the same business. No other inference can be drawn than that an intention to put the plaintiff to a disadvantage in that competition. So far I cannot see that I am not in accord with the majority opinion; and this leads me to say, but with great respect, that the root of the error into which the majority has fallen is the apparent notion that notwithstanding all I have said, still the article must have been of a libelous character per se. It is therein said:

“Whether an article is of a libelous character per se, and whether it has application to a particular party plaintiff, are entirely distinct questions, and should not be confused. The answer to the first question is to be found in the article itself. The answer to the second question is to be found in the proofs supporting proper allegations in the complaint. Those proofs may consist either of the article itself or of extrinsic evidence.”

If it be true, as I think it to be, that the publication was clearly directed against the plaintiff in its business, and thus constituted a cause of action for general damages, then I consider it wholly immaterial whether the publication on its face, considered apart from the circumstances under which it was published, was in and of itself libelous. .Again Newell, at page 181, says:

“When language is used concerning a person or his affairs which from its nature necessarily must, or presumably will as its *775 natural and proximate consequence, occasion him pecuniary loss, its publication prima facie constitutes a eause of action and prima facie constitutes a wrong without any allegation or evidence of damage other than that which is implied or presumed from the fact of publication; and this is all that is meant by the terms ‘actionable per se,’ etc. Therefore the real practical test by which to determine whether special damage must be alleged and proven in order to make out a eause of action for defamation is whether the language is such as necessarily must or naturally and presumably will occasion pecuniary damage to the person of whom it is spoken.”

He then proceeds with a discussion of what constitutes defamation to one in his profession or business.

I am, therefore, led with some regret, to, record my dissent. I think the judgment should be affirmed.