Petition for Writ of Certiorari — Clay Communications, Inc. v. Sprouse

Supreme Court brief1975

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INDEX

Page

SE SET Ann dace jit sense eeceedeedbachankee 2

PN 5 UCh & CW CNEKK A N95 64455 te Os eA EOE 4s 2

EE UIE bane a50 5 4s ngeainnsaenen benks codes 2

Constitutional Provisions Involved ................. 4

NE NE ID no hea idawcdacsihnnscstivecns 4

I. The Evidence Adduced at Trial .............. 6

II. The Opinion of the West Virginia Supreme

er MUNN cu Siva cd bav basa sineeun caus 13

Reasons for Granting the Writ .................... 16

| CT TL eee ee eee ee rT Tree 22

Appendix A—Opinion of the West Virginia Supreme

eG OE CEE dienk se bin cha Wnce awd eankeesewns la

Appendix B—Final Order of the West Virginia Su-

Ne SUE OE SED sacawenns a neenkocunues 55a

Appendix C—Final Order and iene of the Trial

CP Cok ndh ou buh Satan an eebancheaSedeseasens 57a

Appendix D—Order of the Trial Court Dated 12/9/70

and Letter Opinion of the Trial Court Dated

SE, on 5 C44 LA anne £4 RENAE aR 69a

Appendix E—Order of the Trial Court Dated 5/26/70

and Letter Opinion of the Trial Court Dated

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Appendix F—Plaintiff’s Instructions Numbers 2a, 5,

7 and 10 and Petitioner’s Instructions Numbers

2 RA Se | Of ERG ee Cer y were er 75a

: EEE LAPIN EF OTTO BOLL AE BI ESE ELI IETS ERT ER IEE, SPE ARE GS,

Index Continued

CITATIONS

Page

CasES:

Associated Press v. Walker, 388 U.S. 130, 18 L.Ed.2d

BODE, BT ECE IBTG C19GT). oacnccccssccsscccces 14, 18

Barker v. The Traders Bank, 152 W.Va. 774, 166 S.E.

Oe 8 rr rerr erry rer et ee 5

Beckley Newspaper Corp. v. Hanks, 389 U.S. 81, 19

L.Ed.2d 248, 88 S.Ct. 197 (1967) ........... 14, 17, 21

Cantrell v. Forest City Publishing Co., 418 U.S. 909,

pre Re Be) ee rrr rer 14

Cox Broadcasting Corp. v. Cohn, — U.S. —, 43 L.Ed.

SE a ac CANA RANE Na 5945640500 00encey' 4

Curtis Publishing Co. v. Butts, 388 U.S. 130, 18 L.Ed.

2d 1094, 87 S.Ct. 1975 (1967) ...............-. 14, 18

Garrison vy. Louisiana, 379 U.S. 64, 13 L.Ed.2d 125,

Oe eA I CRD 3p kk cae ccanctcndeses ces 14, 17, 18

Gertz v. Robert Welch, Inc., 418 U.S. 323, 41 L.Ed.2d

2, Sear ror ore errr eye 14, 17, 18, 20

Greenbelt Cooperative Publishing Association, Inc. v.

Bresler, 398 U.S. 6, 26 L.Ed.2d 6, 90 S.Ct. 1537

PS BELG CURE EKRu Kea cctecebheces si san 14, 17, 19, 21

Hanks vy. Beckley Newspapers, 149 W.Va. 522, 142 S.E.

Be We Nai ss caWs Caees cas nhc les vonsie sees 5

Henry v. Collins, 380 U.S. 356, 13 L.Ed.2d 892, 85 S.Ct.

EE RG a aA SC esha wchhkadnboneswndeees 14

Monitor Patriot Co. v. Roy, 401 U.S. 265, 28 L.Ed.2d

Ee oe OR 8} errr err rr rrr rt 14, 16

New York Times v. Sullivan, 376 U.S. 254, 11 L.Ed.2d

686, 84 S.Ct. 710 (1964) ..............6. 14, 16, 19, 21

Ocala Star-Banner Co. v. Damron, 401 U.S. 295, 28

L.Ed.2d 57, 91 S.Ot. 628 (1971) ............66.. 14

Old Dominion Branch No. 476, Nat’l Assn. Ltr. Car-

riers v. Austin, 418 U.S. 294, 41 L.Ed.2d 745

RE etaak tier avbnseaNeakehasnabesss 14, 17, 18, 21

Rosenblatt v. Baer, 383 U.S. 75, 15 L.Ed.2d 597, 86

Be NE RAUES oc hte oeeceudenenss vesyteeuens’ 14

Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 29 L.Ed.

Oe BUG, Oh BAK TSE CPTI) ww. ccc cc cece ceeces 14

Index Continued ili

Page

Southwestern Publishing Co. v. Horsey, 230 F.2d 319

Ce a a 20

St. Amant v. Thompson, 390 U.S. 727, 20 L.Ed.2d 262,

ps ME WO 8k ob erin a 44 0U CK cee ccccc ke 14

Time, Inc. v. Hill, 385 U.S. 374, 17 L.Ed.2d 456, 87 S.Ct.

WE ECLOUENN Shakil sé Coen ek cho és a ccacn 14

Time v. Pape, 401 U.S, 279, 28 L.Ed.2a 45, 91 S.Ct. 633

CE ONG SA OhELEN AChE SAG Ga he GC hee e kaki ka 14

Oruer AuTHORITIEs:

Address of Justice Potter Stewart, ‘Or Of The Press,’’

Yale Law School, November 2, 1974 ............ 20

U.S. Constitution, First Amendment ............. 4,5, 14

U. S. Constitution, Fourteenth Amendment .......... 4,5

MI, PII Ws ed a Sh ais ce dale ck aconcixccne 2

eo Sn eae ee a 9

W.Va. Onde, §06-1-1 and Bo... ccc cece ce 5

IN THE

Supreme Court of the United States

OcToBER TERM, 1974

No.

CLay Communications, Inc., Petitioner

Vv.

JAMES M. Sprouse, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

WEST VIRGINIA SUPREME COURT OF APPEALS

Petitioner, Clay Communications, Inc., publisher of

The Charleston Daily Mail, a daily newspaper pub-

lished in Charleston, West Virginia, respectfully prays

that a writ of certiorari issue to review the judgment

and opinion of the West Virginia Supreme Court of

Appeals entered on February 4, 1975, affirming a jury

verdict for $250,000 actual damages, reversing a jury

verdict for $500,000 punitive damages and remanding

the cause with directions to strike the punitive award

from the judgment below in favor of respondent (here-

after ‘‘plaintiff’’) in this libel action.

OPINIONS BELOW

The complete opinion of the West Virginia Supreme

Court of Appeals, printed in Appendix A hereto, is

reported in 211 S.E. 2d 674 (1975). The final order of

the West Virginia Supreme Court is attached hereto

as Appendix B. The order of the Circuit Court of

Fayette County, West Virginia, filed December 21,

1973, together with a Memorandum Opinion of said Cir-

cuit Court dated December 7, 1973, is attached hereto

as Appendix C. The order of said Circuit Court dated

December 9, 1970, together with a letter opinion of said

Circuit Court dated November 10, 1970 is attached

hereto as Appendix D. The order of said Circuit Court

dated May 26, 1970, together with a letter opinion of

said Circuit Court dated March 24, 1970, is attached

hereto as Append*x E. The instructions given and re-

fused by the trial . rt are contained in the Record of

Proceedings in the trial court at pages 857-894." The

instructions here complained of are attached hereto as

Appendix F.

JURISDICTION

The judgment of the Supreme Court of Appeals was

entered on February 4, 1975. The jurisdiction of this

Court is invoked pursuant to 28 U.S.C. § 1257.

QUESTIONS PRESENTED

1. Whether in a libel action by an unsuccessful guber-

natorial candidate against a newspaper that sup-

ported his successful opponent, publications may

1 Appendix references herein are by page number as ‘‘App. A,

p. la’’. References to the Record of Proceedings in the trial

court are by page number as ‘‘R. 1’’, References to errors assigned

by petitioner in the W. Va. Supreme Court of Appeals, although

designated R. , are to numbered pages of the Petition which is

the first document in the Record.

be held actionable without abridging First Amend-

ment freedoms on the ground that their headlines,

through use of such words as “bonanza,” ‘dis-

closed,’’ ‘‘clean-up,”’ “‘dummy corporation,’’ and

“land grab’’ intentionally conveyed a ‘“mislead-

ing’’ impression that the plaintiff had been guilty

of improper conduct, although the body of the

stories concededly contained no such assertion be-

yond quoting correctly plaintiff’s opponent in the

election, who used the words “land grab’? and

‘‘dummy corporation.”’

. Whether a publication, reporting accurately state-

ments made by the plaintiff’s opponent in the elec-

tion, may constitutionally be held actionable on

the ground the newspaper knew or was reckless

with respect to the falsity of the statements by the

oponent.

. Whether in the same action it was constitutionally

permissible for the jury in determining malice, and

the Court in sustaining its determination, to

accord weight to the inference that a motive of the

publication was to injure the plaintiff in his

candidacy for election or to assist his opponent.

. Whether the record as a whole, including any devi-

ation between the headlines and the body of the

stories and the instructions to the jury, is consti-

tutionally sufficient to sustain a finding that the

publications contained false and defamatory state-

ments of fact published with knowledge that they

were false or with a reckless disregard of whether

they were true or false.

. Whether the plaintiff’s uncorroborated testimony,

over objection, that he believed his campaign for

Governor was seriously damaged by the publica-

tions and that his reputation was damaged and that

he and his family suffered mental anguish as a re-

sult thereof, (although subsequently, and before

trial, he had been elected to the state’s highest

court) was constitutionally sufficient to sustain a

jury award of $250,000 as actual damages.

CONSTITUTIONAL PROVISIONS INVOLVED

Constitution of the United States

Amendment I: ‘‘Congress shall make no law...

abridging the freedom of speech, or of the press. . . .”’

Amendment XIV: ‘‘....[NJor shall any state de-

prive any person of life, liberty, or property, without

due process of law; nor dery to any person within its

jurisdiction the equal protection of the law.”’

STATEMENT OF THE CASE

Plaintiff, James M. Sprouse, since January 1973, a

Justice of the Supreme Court of Appeals of West

Virginia, but in 1968 the nominee of the Democratic

Party for Governor of that State, brought an action for

libel against petitioner based on publications contained

in petitioner’s Republican newspaper, The Charleston

Daily Mail, (hereafter the ‘‘ Daily Mail’’) on October

24 and 25, 1968. In the November, 1968 general elec-

tion, plaintiff lost the election to his Republican oppon-

ent, Arch A. Moore, Jr. The action for libel was insti-

tuted in Fayette County, West Virginia, on October 29,

1969, after an earlier action, based on the same publica-

tions, instituted on October 29, 1968, in Kanawha

County, West Virginia, where plaintiff then resided

and where the Daily Mail is published, had been dis-

missed on motion for failure to state a claim on which

relief could be granted.’

A trial which began in Fayette County, West Vir-

ginia, on July 25, 1973, culminated in a jury verdict for

$250,000 compensatory and $500,000 punitive damages.

In the trial court, petitioner objected on First Amend-

ment grounds to (a) the sufficiency of the evidence by

motions for a directed verdict (R. 576, 648-652) and

for judgment N.O.V. (R. 117-125), (b) admission of

plaintiff’s testimony that the publications damaged his

political campaign and, inferentially, lost him the elec-

tion (R. 445-453), (ec) the giving and reading to the

jury of plaintiff’s instructions number 2a (R. 681-683),

9 (R. 663-665), 7 (R. 666-669) and 10 (R. 673-675) and

(d) the refusal to give and read to the jury a portion

of petitioner’s instruction number 3 (R. 685), and peti-

2In the Cireuit Court of Fayette County petitioner moved to

dismiss this action for lack of venue and moved for Summary

Judgment on the grounds of res judicata. The denial of these

motions was unsuccessfully urged as error in the court below (R.

21, App. A, pp. 29a-36a). The opinion of the court below ignored

petitioner’s argument that the court’s reading of the West Virginia

venue statutes (W.Va. Code, § 56-1-1 and 2) in Hanks v. Beckley

Newspapers, 149 W.Va. 522, 142 S.E. 2d 747 (1965), to the effect

that any incorporated publisher could be sued for libel in any

county in which the newspaper is circulated, violates the First

and Fourteenth Amendments. It is clear that under the West

Virginia venue statutes, an unincorporated publisher can only

be sued for libel in the county where he resides, absent a venue

giving corporate defendant. The court below also held that in fu-

ture cases, but not in this case, dismissal of a prior action in the

manner done in this ease by the Circuit Court of Kanawha County

would constitute a final adjudication on the merits. Since the

same legal principle had been previously established by the court

below in Barker v. The Traders Bank, 152 W.Va. 774, 166 S.E.2d

331 (1969), petitioner may have been denied the ‘‘fundamental

fairness’? required by the Fourteenth Amendment. These issues

are not included in the Questions Presented or as Reasons for

Granting the Writ in this Petition.

tioner’s instructions number 6 (R. 687), 7 (R. 687-689),

14 (R. 693), 16 (R. 694-695) and 18 (R. 698-699).

These objections were renewed as points of error in

the Supreme Court of Appeals (R. 22-25), but are

either ignored in the Court’s opinion, summarily re-

jected in the opinion in n. 1 at App. A, pp. 5a-6a, or

rejected in the opinion at App. A, pp. 37a-40a.

I. THE EVIDENCE ADDUCED AT TRIAL

A. Background of the Publications and Participation of the

Moore Aides.

Early in his 1968 campaign for Governor of West

Virginia plaintiff made a public disclosure through the

media of what he said was his income and assets. A

front page story in the Democratic ‘‘Charlston Ga-

zette’’ on March 28, 1968, quoted plaintiff as deserib-

ing his assets as follows: ‘‘A house in Charleston,

value about $49,000, mortgage of $23,600 outstanding ;

farm, equipment and animals in Randolph County,

value about $15,000; lots in Nicholas County, Dunbar

and Florida, total value about $6,700; interest in forest

acreage, Pendleton County, $10,000; 60 shares Life

Insurance of Kentucky, $1,800; 250 shares Riverside

Nursing Home, $12,000; varying number of shares in

the name of each of his five (5) children, Massachusetts

Mutual Growth Fund for Edueation, $10,000 ...”’

(R. 461). (Emphasis supplied). Plaintiff testified

the story was correct as far as he knew (R. 463).

On or about October 14, 1968, two campaign aides

of Republican Candidate Arch A. Moore, Jr., met with

the Daily Mail’s Editor, Managing Editor and Political

Editor. (R. 555, 556). The Moore aides had documen-

tary evidence concerning plaintiff’s connection with

Selmet Properties, Inc., a New York corporation,

(hereinafter ‘‘Selmet’’) which indicated that plain-

tiff’s statement in March of 1968 that he “owned an

interest in forest acreage, Pendleton County, $10,000”

was misleading in that the value of the acreage was sub-

stantially understated, and that he did not own it di-

rectly, but through Selmet.

The two Moore aides were Norman Yost, a profes-

sional newspaperman, and William Loy, a West Vir-

ginia attorney who, before joining Moore’s staff, had

practiced law in the West Virginia judicial circuit

which included Pendleton County and who had lived

in the area since childhood. (R. 629, 630).

The Daily Mail employees with whom the Moore

aides met were Editor, Jack Maurice, Managing Editor,

Vint Jennings (now deceased) and Robert Mellace,

Political Editor. Maurice had been a working news-

paperman continuously since his college matriculation

in 1935 (R. 554). Mellace, except for three years in the

Army after his university matriculation in 1941, had

also continuously been a working newspaperman, first

serving as a reporter, columnist and Managing Editor

of the Morgantown, (W. Va.) Post, and since 1953, as

State Capitol Reporter and Political Reporter of the

Daily Mail (R. 373).

The documents and other information supplied the

Daily Mail by Loy related to plaintiff’s connection with

Selmet, which had been incorporated as a New York

corporation in 1965, and which, in 1966, had acquired

for $134,620 cash, 2,900 acres of land in Pendleton

County, West Virginia, adjacent to the Monongahela

National Forest and close to a large recreational com-

plex, the development of which had been authorized

by the U.S. Congress in September 1965. From out-

conveyances, Selmet had already received $182,796.75

OO SURESH Reape eRe aaireny- 7 meneR zm HGS NE Pete Hh gett gh MEMES UR ARES Reng

at the time of publication. The most recent outconvey-

ance by Selmet had been made only a short time before

publication, on October 2, 1968. This was a deed to

Nature Conservancy, Inc., for a recited sales price of

$81,364, which conveyance Loy said was for the ulti-

mate transfer to the U.S. Forest Service, a transfer

that was later made on June 9, 1969 (R. 843). Except

for his execution of some deeds as President of Selmet,

and his execution of an application to qualify this

foreign corporation to do business in West Virginia,

plaintiff made no other public disclosure of his interest

in Selmet before his press conference on October 25,

1968, the day after the Daily Mail publication of Octo-

ber 24, 1968 (R. 465).

The Daily Mail Editors were fully aware of the self

interest of the Moore aides, but as Mellace testified,

“*. .. 99% of stories like this are originated by some-

body in a political campaign”’ (R. 283).

The Daily Mail Editors decided that Mellace should

go to Elkins, West Virginia, the site of the West Vir-

ginia office of the U.S. Forest Service and to Pendleton

County, where the Selmet land was situated to investi-

gate the matter.

Mellace flew to Elkins on October 22, 1968, in a plane

owned and piloted by Daily Mail photographer, Chester

Hawes (R. 597). They were accompanied by William

Loy, who knew where the Selmet property was located

(R. 640). Another Moore aide, Sandy Latimer, met

Mellace, Hawes and Loy at the Elkins Airport and

drove Mellace to the places he wanted to go (R. 291-

292).

Mellace first visited the office of the U.S. Forest Serv-

ice, where he went in alone (R. 292) and talked for

about an hour and one-half (R. 301) with E. M. Olliver,

the senior officer in charge.

The Moore aides then drove Mellace and the Daily

Mail photographer to the location of Selmet’s remain-

ing acreage which was level and adjoined a highway.

Using the acreage recited in Selmet’s out conveyances,

Mellace calculated Selmet had valuable property re-

maining of more than 400 acres. Based on the sales

prices of similar property sold by Selmet and informa-

tion Mellace obtained from local residents, Mellace

believed that Selmet’s remaining acreage might be

worth as much as $400,000.

Abstracts of public records made by attorney Loy

and provided to Mellace demonstrated that Selmet had

violated West Virginia law by acquiring the 2,900 acres

and making several sales of real estate without quali-

fying to hold property and to do business in West Vir-

ginia (W. Va. Code, § 31-1-79).

On October 24, 1968, about an hour and a half before

the Daily Mail was on the streets, Mellace gave Moore

aide, Yost, a carbon copy of his story for distribution

to other newspapers (R. 363-365). A carbon copy was

also routinely made available to the Associated Press

(R. 561).

There is no evidence that the Moore aides did any-

thing more than supply Mellace with information, the

accuracy of none of which is disputed. There is no evi-

dence of a ‘“‘plan or scheme”? to discredit plaintiff

unless the evidence summarized under this subheading,

plus the fact that the Daily Mail is a Republican news-

paper, can be so characterized.

PRRere cesses RTE RITES REPO INE AMSA ERG EAM SGOT mE ak

. ? sa bl el Dae 7 nye ts

B. The Publications.

The three Daily Mail publications at issue in this

ease were published in the Daily Mail of October 24,

1968 and October 25, 1968 and are reproduced in the

Appendix to the Opinion of the Supreme Court of

Appeals of West Virginia (Appendix A to this Peti-

tion).

Except for the headlines, all of which were written

at the ‘‘copy”’ or ‘‘news desk”’’ by one or more of sev-

eral ‘‘copy writers’’ under direction of a copy or news

editor (R. 560, 561), the three stories were written by

Robert Mellace.

The Daily Mail story of October 24, 1968 reported

that a New York corporation (Selmet) headed by

plaintiff stood to make a handsome profit dealing in

property located in Pendleton County, West Virginia,

close to a federally funded recreation complex. The

story told where the property was located, when and

from whom it was acquired, how much of the acreage

had been sold, how much of the acreage appeared to be

still owned by Selmet and other details concerning the

land dealings of Selmet and plaintiff’s involvement

with Selmet, all of which was learned by Mellace in his

investigation or furnished to Mellace by Loy. The

West Virginia Supreme Court concedes that this story

was factually accurate (App. A, p. 8a).

One of the stories in the Daily Mail of October 25,

1968 was about D. C. Harper and the ‘‘Seneca Rocks’”’.

While he was in the Pendleton County area, Mellace

and his party made a chance stop at the general store

operated by D. C. Harper. Mellace knew Harper. In

talking to him, Mellace learned that the U.S. Forest

Service had offered the Harper family $7,900 for the

‘Seneca Rocks’? which Harper said his faimly had

owned for approximately 200 years and which are a

great natural scenic attraction. Congress, in establish-

ing the ‘Recreation Area’? by Public Law 89-207,

named it the ‘‘Spruce-Knob-Seneea Rocks National

Recreational Area.’’ Mellace though it newsworthy

that the U.S. Forest Service would voluntarily pay

Selmet $81,364 for recently cut over hillside for a road

location, but would only offer the Harper’s $7,900 for

their famous Seneca Rocks. Mellace’s opinion was

vindicated later. In a condemnation proceeding the

Harpers were awarded $175,000 for the Seneca Rocks

(R. 270). The factual accuracy of the Mellace story is

conceded by the court below.

The other story in the Daily Mail of October 25, 1968

admittedly quotes, and quotes correctly, statements of

Arch A. Moore, Jr., plaintiff’s opponent in the West

Virginia gubernatorial election campaign.

The headlines of the stories were not written by either

Mellace or Maurice (R. 304, 307, 336-337, 340-341, 560-

561) and there is no evidence that the writer of any of

the headlines entertained any doubts about the truth

of the headlines. Mellace testified: ‘“‘No, I didn’t see

the headline before it went in the paper.”’ (R. 304).

The only evidence at the trial about the proper purpose

of headlines was the testimony of Daily Mail Editor,

J. D. Maurice (R. 561) that: “The primary function

of the headline in the Daily Mail, and I guess in most

newspapers, is to call the reader’s attention to, and give

Ee MERE WPI COGS HNL YET NOME, SR AMEE EN ISSO

some indication of, the content of the story which fol-

lows.”’

C. Damages.

Plaintiff alleged no pecuniary loss in his complaint,

but in his prayer for general damages, alleged that his

political career as a candidate for Governor was ‘‘dam-

aged beyond repair.”” (R. 10). At the trial plaintiff’s

only evidence of damages was his own uncorroborated

testimony that his political campaign was damaged, that

his reputation had been damaged, and that he and his

family had suffered mental anguish. Petitioner

objected to plaintiff being permitted to testify about

damage to his political campaign. The trial court ruled

that this evidence was admissible on the question of

general damages (R. 445-453).

In 1972 plaintiff was nominated as a Democratic

candidate for and subsequently was elected to the

Supreme Court of Appeals, receiving in the primary

and general election the highest vote of any candidate

(R. 840 E, 840 F).

The jury returned a verdict of $250,000 compensatory

and $500,000 punitive damages.

D. The Instructions.

While generally speaking the instructions given the

jury by the trial court paid lip service to New York

Times, this petitioner objected to some of them at the

trial and on appeal contended that the giving of these

instructions was error. (See n.1, App. A, pp. 5a-6a).

Plaintiff’s instruction No. 2a (R. 859) instructed the

jury that ‘‘libel’’ in the case of a nominee for public

office was a ‘‘false writing’’ published with a reckless

disregard of its falstiy ‘‘and which tends to injure the

reputation of the nominee ...”’ Plaintiff’s instruction

No. 5 said in effect that petitioner had no greater right

to speak critically of the plaintiff during a political

campaign than on any other occasion. Nowhere in any

of plaintiff’s instructions or in any of those of peti-

tioner which were given by the trial court was the jury

told that there had to be a ‘‘false statement of fact??

rather than just a false statement. Petitioner’s instrue-

tion No. 6, which the trial court refused to give and

which action the court below sustained, would have

told the jury that there had to be a false statement of

fact and that illwill or other bad motives were not

evidence of actual malice. While refusing the peti-

tioner’s instruction No. 6, the court gave plaintiff’s in-

struction No. 7 which instructed the jury that illwill

could be considered as evidence of actual malice. These

and other instructions complained of are set forth in

full in App. F, pp. 75a-79a.

. IL THE OPINION OF THE WEST VIRGINIA SUPREME COURT

OF APPEALS

On appeal, the Supreme Court of Appeals of West

Virginia, with Justice Sprouse and another of the

five members of the court disqualifying themselves,

affirmed the judgment insofar as it awarded $250,000 as

‘actual damages’’. In the view that “an award of

$250,000 actual damages is adequate for the purpose of

dissuading publishers from similar willful reckless con-

duct in the future’ and that ‘“‘an award of $750,000

would have a chilling effect upon the legitimate exer-

cise of First Amendment rights’’, the verdict and judg-

ment of $500,000 as punitive damages were set aside.

In sustaining the judgment awarding $250,000 as

“factual damages’’, the court below purported to recog-

ee BSE OTOL ELEN GN NR CH OEERE 2 AL OPEC PME REN

ee niin . onan -

nize that the plaintiff, as a candidate for governor com-

plaining of a publication as a libelous aspersion of his

integrity, was required by New York Times, and later

decisions of this Court * interpreting the First Amend-

ment, to prove a false and defamatory statement pub-

lished maliciously, t.e. with knowledge that it was false

or with a reckless disregard of whether it was false or

not. The court below considered that the publica-

tions ‘‘implied that enormous profits would inure to

Sprouse’s benefit as a result of ‘inside’ information

which Sprouse acquired through his Democratic Party

affiliation concerning plans of the United States Gov-

ernment to establish a national park at Seneca Rocks.”’

(App. A, p. 4a). Though none of the three stories

3 For brevity and ease of reading, we shall in this Petition refer

to past First Amendment decisions of this Court by their short-

hand names, i.e. New York Times, Garrison, Butts, Gertz, ete.

Decisions so referred to may include New York Times v. Sullivan,

376 U.S. 254, 11 L.Ed. 2¢ 686, 84 S.Ct. 710 (1964); Garrison v.

Louisiana, 379 U.S. 64, 13 L.Ed.2d 125, 85 S.Ct. 209 (1964) ; Henry

v. Collins, 380 U.S. 356, 13 L.Ed.2d 892, 85 S.Ct. 992 (1965);

Rosenblatt v. Baer, 383 U.S. 75, 15 L.Ed.2d 597, 86 S.Ct. 669

(1966) ; Time, Inc. v. Hill, 385 U.S. 374, 17 L.Ed.2d 456, 87 S.Ct.

534 (1967) Curtis Publishing Co. v. Butts, and Associated Press v.

Walker, 388 U.S. 130, 18 L.Ed.2d 1094 87 S.Ct. 1975 (1967);

Beckley Newspapers Corp. v. Hanks, 389 U.S. 81, 19 L.Ed.2d 248,

88 S.Ct. 197 (1967); St. Amant v. Thompson, 390 U.S. 727, 20

L.Ed.2d 262, 88 S.Ct. 1323 (1968); Greenbelt Cooperative Pub-

lishing Assn. v. Bresler, 398 U.S. 6, 26 L.Ed.2d 6, 90 S.Ct. 1537

(1970) ; Monitor Patriot Co. v. Roy, 401 U.S. 265, 28 L.Ed.2d 35, 91

S.Ct. 621 (1971); Time v. Pape, 401 U.S. 279, 28 L.Ed.2d 45, 91

S.Ct. 633 (1971) ; Ocala Star-Banner Co. v. Damron, 401 U.S. 295,

28 L.Ed.2d 57, 91 S.Ct. 628 (1971); Rosenbloom v. Metromedia,

Ine., 403 U.S. 29, 29 L.Ed.2d 296, 91 S.Ct. 1811 (1971); Gertz

v. Robert Welch, Inc., 418 U.S. 323, 41 L.Ed.2d 789, (1974); Old

Dominion Branch No. 476, Nat’l Assn. Ltr. Carriers vy. Austin,

418 U.S. 264, 41 L.Ed.2d 745 (1974) ; Cantrell v. Forest City Pub-

lishing Co., 418 U.S. 909, 42 L.Ed.2d 419 (1975) ; Cox Broadcast-

ing Corp. v. Cohn, — U.S. —, 43 L.Ed.2d 328 (1975).

published by petitioner stated that plaintiff had

acquired such ‘inside information’’, the court below

held the evidence sufficient to sustain a jury verdict of

malicious falsehood on essentially the following asserted

grounds:

(1) The stories were published pursuant to a plan

and purpose to injure the plaintiff’s gubernatorial

candidacy and to aid his Republican opponent (App.

A, pp. 25a, 26a, 40a) ;

(2) Given that plan and purpose, the use of “‘mis-

leading words in over-sized headlines’’, such as “land

grab’’, ‘‘dummy firm’’, ‘‘bonanza’’, ‘disclose’? and

“‘elean up’’, conveyed an intentionally false implica-

tion unsupported by the body of the publications (App.

A, pp. 7a, 8a) ;

(3) Given that plan and purpose, ‘‘the difference

between the fair implication of the headlines as opposed

to the supporting factual recitation of the stories is

evidence alone of malice, which absent evidence to the

contrary, supports the jury verdict”’ (App. A, pp. 25a-

27a) ; and

~~ (4) Given that plan and purpose, the petitioner

“did not publish the stories in question exclusively as

a news gathering agency”’ and was not, therefore en-

titled, as petitioner contends, to publish the statement

of plaintiff’s opponent in the election without subject-

ing it to ‘‘any test of truth”’. (App. pp. 18a, 19a, 25a-

27a, 40a).

Even the wholly accurate story published on October

25, 1968, under the headline ‘‘Fortune to Jim Sprouse

Pittance for Seneca”’ and the subheadline ‘Landmark ’s

Owners Plan Court Fight Against Deal’’ was held to

————— et si iadanintaiiliintea iariaamteinmemmea an eiito am icant

support ‘‘a jury conclusion that there was a deliberate

effort to imply that profit to Sprouse was acquired at

the expense of an honest farmer’’, and to have been

‘‘published with knowledge that it was false or mislead-

ing’’—though the contrast between payment to the

plaintiff’s company ond the offer to the owner of the

Seneca Rocks was plainly a fact that the petitioner

was constitutionally privileged to publish.

Finally, in sustaining the award of $250,000 in

‘actual dumages’’ the court below said:

“The job of determing such intangible and sub-

jective dp as personal humiliation, mental

anguish, and indignity has always been the exclu-

sive province of the jury subject to the gentle rule

that awards in these areas not be excessive. In

light of the amount of jury awards for pain and

suffering which are routinely sustained by appel-

late courts in tort actions involving physical in-

jury, and considering the rank and station in life

of the plaintiff at the time of publication, this

Court finds that the award of $250,000 actual dam-

ages were not excessive.’’ (App. A, p. 29a).

REASONS FOR GRANTING THE WRIT

The judgment of the Supreme Court of Appeals of

West Virginia sustaining the verdict and judgment of

$250,000 ‘‘actual damages”’ for libel abridges First

Amendment freedom in the area in which this Court has

said ‘‘the constitutional guarantee has its fullest and

most urgent application—the conduct of campaigns for

public office’. Monitor Patriot Co. at p. 272. Con-

ceiving the question presented to be one of ‘‘first

impression in the United States in light of New York

Times v. Sullivan”? (App. A, pp. 4a, 5a) and the case

‘‘unique in the annals of reported libel cases’’ (App.

A, p. Ta), the judgment fashions a novel test of lia-

bility in libel actions by an unsuccessful candidate

against a newspaper supporting his opponent. If the

judgment stands, its inevitable consequence will be a

litigious sequel to hotly contested elections that clearly

is repugnant to the Constitution. Both the principles

put forward by the court below and their application to

this record call for review and reversal by this Court,

1. In holding that there was sufficient evidence of

“actual malice’? to sustain liability for ‘‘misleading”’

headlines appearing above each of the three articles, the

court below aceorded decisive import to what it con-

ceived to be a plan and purpose on the part of the peti-

tioner and the opposing candidate for Governor to

injure the plaintiff's reputation and his chances of

election. This plan and purpose were accorded weight

in holding that the headlines were defamatory, in hold-

ing that the discrepancy between the headlines, [which

the court below characterizes as ‘‘misleading words...

rather than outright false statements” (App. A, p. 7a)],

and the “‘facts’’ in the body of the stories was sufficient

evidence of actual malice, and in denying any privilege

to print the statements of plaintiff’s opponent without

subjecting them to a test of truth. This was a repudia-

ion of the doctrine of this Court that an intent to

injure, as distinguished from intent to injure by pub-

lishing knowingly or recklessly false and defamatory

statement of fact, is insufficient to permit recovery in

libel. Garrison at p. 73, 74, Beckley Newspapers,

Greenbelt, Old Dominion, Gertz. The judgment totally

ignored the teaching of this Court that ‘rhetorical

hyperbole”’ is not constitutionally actionable (Green-

belt at p. 14) and that “Under the First Amendment

there is no such thing as a false idea. However pernici-

—————— acini iliac ind eeeladn aie nlanianiaaaemmicdmate ene ee me

ous an opinion’, we do not depend on courts for its

correction, ‘‘but on the competition of other ideas.’’

Gertz at p. 339.

No less significantly, the court below misread the

judgments of this Court in Butts and Walker, to ‘‘stand

for the proposition that when a newspaper departs

from an attempt to report the news objectively, the

fact of such departure can be considered by the jury

and an appellate court in determining whether there

was willful disregard of truth’’ (App. A, pp. 18a-20a).

These decisions, the court below thought, ‘‘stand for the

proposition that personal motives on the part of a news-

paper, or participation by a newspaper in a plan or

scheme to injure, is evidence of recklessness and willful

disregard for truth which may be considered with

other evidence on the question of actual malice’’. Since

there was no other evidence, motive and plan were the

determinative factors in themselves, in clear defiance

of this Court’s decision in Garrison at p. 73, and later

decisions, most recently Gertz and Old Dominion. In-

deed, the notion that it is appropriate for a court in

appraising liability for libel to differentiate between a

newspaper that publishes ‘‘exclusively as a news gather-

ing agency”’ and one that ‘‘departs from an attempt to

report the news objectively’? (App. A, p. 18a, 19a) re-

flects a misconception of the freedom of the press that

should not escape correction by this Court.

2. The court below sustained the jury verdict for

plaintiff in part on the headline terms ‘‘dummy firm,’’

‘land grab,’’ and the accompanying story accurately

reporting statements made by and attributed to Arch

A. Moore, Jr., plaintiff’s opponent in the 1968 guber-

natorial campaign (who was also at the time a member

of the U. 8. House of Representatives). The opponent

used the terms which were in the Daily Mail headline.

The court below also sustained the refusal of the trial

court to give petitioner’s proposed Instruction No. 7

(App. F, p. 78a) which would have instructed the jury

that the Daily Mail had no duty to subject Moore’s

statement to any test of truth.

Aside from the lack of evidence in this record to

show that the Daily Mail published Moore’s statements

on October 25, 1968, with the high degree of awareness

of probable falsity required for a finding of actual

malice or even subjected the Moore statements to any

test of truth, is it consistent with the First Amendment

to impose on the press a duty to censor a statement of

public officials and candidates for public office when a

newspaper reporter may not believe it to be true? Ts

a newspaper to sit in judgment as to whether a publie

official is expressing a falsehood or speaks with a reck-

less disregard of truth? New York Times and subse-

quent cases have not faced this specifie issue, the clos-

est analogy being Greenbelt. Because of the decision

below it is timely and important that this question be

considered by this Court. Such a duty to censor is

clearly contrary to the spirit of New York Times and

its progeny and to the First Amendment distinction

between freedom of speech and a free press. To re-

quire, at the risk of i:bel awards, that the press exer-

cise such a censorship role is incompatible with our

‘profound national commitment to the principle that

debate on public issues should be uninhibited, robust

and wide open.’”?’ New York Times at p. 270. Such a

requirement would, as a practical matter, make it im-

possible for the press even to ‘‘serve as a neutral forum

for debate, a ‘market place for ideas,’ a kind of Hyde

Park corner for the community,’’ itself a limited con-

ee ai aad at al Aidala lila oh) a bial BEMe bide ita 7 a Bde aden Bad

cept of press freedom which at least some members of

this Court reject.*

3. In holding that the award of $250,000 actual

damages is supported by the evidence, consisting as it

did of plaintiff’s uncorroborated testimony that his

political campaign was seriously damaged, that he and

his family had suffered mental anguish and that his

reputation had been injured, the court below decided

an important question of First Amendment law that

warrants the consideration of this Court. The full

implications of this Court’s opinion in Gertz on the

measure of ‘‘actual damages’’ in libel are significantly

tested by a case in which the gravamen of the plain-

tiff’s grievance, emotionally repeated by his counsel

at the trial (R. 747, 805, 806), is that he lost a guberna-

torial election, though he was subsequently elected to

the State’s highest court. Whether loss of the election

is an admissible item of ‘‘actual damage’’ given the

inevitably speculative question of cause and effect in

such an area [see Southwestern Publishing Co. v.

Horsey, 230 F.2d 319 (9th Cir. 1956)] is in itself an

important question warranting this Court’s review.

The analogy drawn by the court below (App. A, p. 29a)

to ‘‘the amount of jury awards for pain and suffering

which are routinely sustained by appellate courts in

tort actions involving physical injury’’ hardly reflects

the sensitivity to First Amendment values that this

Court reflected in discussing ‘‘actual damages’? in

Gertz.

The court below saw no question of constitutional

magnitude in the size of the Fayette County jury ver-

* Address of Justice Potter Stewart, ‘‘Or Of the Press’’, Yale

Law School, November 2, 1974.

dict, in admitting plaintiff’s testimony regarding dam-

age to his political campaign, or in giving plaintiff’s

Instruction 10,° even though plaintiff is a very popular

political figure in Fayette County, having carried it

over Moore in 1968 by a vote of 14,671 to 6,602 (R.

840-B).

4. The court below admits to a concern that its

decision ‘‘may ultimately result in self censorship by

newspapers.’’? (App. A, p. 24a).

This Court “has often recognized that in cases in-

volving free expression we have the obligation, not

only to formulate principles capable of general appli-

cation, but also to review the facts to insure that the

speech involved is not protected under federal law.”’

Old Dominion Branch at p. 282; New York Times at

pp. 284-285; Greenbelt at p. 11. ‘We must ‘make an

independent examination of the whole record,’ Ed-

wards v. South Carolina, 372 U.S. 229, 235, so as to

assure ourselves that the judgment does not constitute

a forbidden intrusion on the field of free expression. ”’

New York Times at p. 285.

A review of the record discloses that here, as in

Beckley Newspapers vy. Hanks, the West Virginia Su-

preme Court has failed to abide by the First Amend-

ment.

*Plaintiff’s instruction No. 10 (App. F, p. 76a) inferentially

Suggested to the jury that any award of actual damages not exceed-

ing the $1 million sued for would be proper.

a RT Or Me ata CERNE REIN ASSET NR HERE

CONCLUSION

If the constitutional guarantee of a free press is to

mean anything as against a State Supreme Court

which pays lip service to but ignores the decisions of

this Court, this case must be reviewed.

Respectfully submitted,

F. Pau CHAMBERS

CHARLES Q. GAGE

1601 Kanawha Valley Building

Charleston, West Virginia 25301

Attorneys for Petitioner

Of Counsel: es

JACKSON, Ketiy, Hott & O’ FARRELL

1601 Kanawha Valley Building

Charleston, West Virginia 25301

May 2, 1975

APPENDIX

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Say ge aE LLIN, PEPE CEL lea re

APPENDIX A

Decision of the West Virginia Supreme Court

Filed February 4, 1975

Justices Haden and Sprouse, deeming themselves dis-

qualified, did not participate in the consideration or

decision of this case.

No. 13463

James M, Sprouse

Cray Communication, Inc.

Fayette County

Reversed in part,

affirmed in part,

remanded with

instructions.

NEELY JUSTICE

1. A candidate for political office is governed by the

same rules with regard to recovery for libel as a public

official and can sustain an action for libel only if he can

prove that: (1) the alleged libelous statements were false

or misleading; (2) the statements tended to defame the

plaintiff and reflect shame, contumely, and disgrace upon

him; (3) the statements were published with knowledge at

the time of publication that they were false or misleading

or were published with a reckless and willful disregard of

truth; and, (4) the publisher intended to injure the plain-

tiff through the knowing or reckless publication of the

alleged libelous material.

2. Where oversized headlines are published which

reasonably lead the average reader to an entirely different

conclusion than the facts recited in the body of the story,

and where the plaintiff can demonstrate that it was the

intent of the publisher to use such misleading headlines to

create a false impression on the normal reader, the head-

lines may be considerd separately with regard to whether

a known falsehood was published.

3. Where a candidate for public office who is plaintiff in

a libel action can demonstrate an overall plan or scheme,

the object of which was to injure plaintiff through the pub-

lication of defamatory material, a deviation between the

clear purport of defamatory headlines and the remainder

of the news stories reciting facts not defamatory in nature,

is evidence of reckless and willful disregard for truth which

may be considered along with other evidence on the

question of actual malice by the jury, and may be consid-

ered by an appellate court in reviewing a jury judgment

under the First Amendment to the United States Consti-

tion as applied to the states by the Fourteenth Amendment.

4. In cases involving alleged libel of a candidate for

public office by a newspaper where the protections afforded

to the newspaper by the First Amendment to the United

States Constitution as applied to the states by the Four-

teenth Amendment must be jealously guarded, an award

of punitive damages will be sustained on appeal only when

it is determined that the jury’s award of actual damages

is inadequate to dissuade newspapers similarly situated

from engaging in like conduct in the future.

5. In all future cases the dismissal of an action under

Rule 12(b)(6) W.Va. RCP for failure to state a claim

upon which relief can be granted shall be a bar to the

prosecution of a new action grounded in substantially the

same set of facts, unless the lower court in the first action

specifically dismisses without prejudice; however, in the

ease sub judice a former dismissal in Kanawha County

under Rule 12(b)(6) did not operate as a bar to a sub-

sequent action in Fayette County because the record clearly

reveals that the action, although dismissed, was not dis-

missed on the merits, showing that the court intended to

dismiss only the complaint.

6. Venue for alleged libel against a domestic corporation

is properly laid in any county in which the libel was pub-

lished regardless of the residence of the defendant and

this rule is not changed by W. Va. Code, 59-3-1 [1967].

7. Where a jury instruction is improperly refused, and

where it further appears to the appellate court that the

case was tried on the correct theory and that the sub-

stance of the refused instruction was adequately covered

in other instructions, and where it further conclusively

appears to the appellate court that the outcome of the

case would not have been affected by the giving of the

refused instruction, the error is harmless and the case will

not be reversed for refusal to give that instruction alone,

8. As a general rule a newspaper is protected by the

First Amendment to the United States Constitution as

applied to the states by the Fourteenth Amendment when

it publishes in good faith the statements of candidates for

office about their opponents, and in this regard a news-

paper is not required to make an independent investigation

of the truth of such assertions by opposition leaders; how-

ever, when it conclusively appears from the evidence that

the newspaper published the statements of an opposition

political leader as part of an overall plan or scheme to

injure a political candidate, knowing that the quoted state-

ments were false or misleading, and when it further appears

that the newspaper acted independently by publishing such

statement by an opposition leader under a headline libelous

per se authored by the defendant newspaper, the jury may

infer that the statement by the opposition leader was pub-

lished with actual malice, in which case the First Amend-

ment will not shield the defendant newspaper.

—_

ee EEA LILY PES NN TA AT HE NE INE NRT AP EER

NEELY, Justice:

In the fall of 1968 James M. Sprouse was a practicing

attorney in Charleston, West Virginia, and the Demo-

cratic Party candidate for Governor of the State of West

Virginia. Approximately two weeks before the November

election the Charleston Daily Mail published a series of

articles implying that James M. Sprouse had engaged in

real estate transactions in Pendleton County, West

Virginia, of such a nature as to cast aspersions upon

Sprouse’s integrity. The articles implied that enormous

profits would inure to Sprouse’s benefit as a result of

‘‘inside’’ information which Sprouse acquired through his

Democratic Party affiliation concerning plans of the United

States Government to establish a national park at Seneca

Rocks in Pendleton County. A complete text of the articles

in question is reproduced in the appendix to this opinion

and it is suggested that the articles be read in their en-

tirety at this point in order fully to understand the appli-

cation of the intricate law of libel to the facts of this case.

The plaintiff, James M. Sprouse, recovered a jury award

in the Cireuit Court of Fayette County for $250,000 actual

damages and $500,000 punitive damages against Clay Com-

munications, Inc., owner of the Charleston Daily Mail, a

newspaper of general circulation in numerous West

Virginia counties. The defendant, Clay, strenuously

argued that under New York Times Co. v. Sullivan, 376

U.S. 254 (1964) and its progeny, the defendant is not liable

for the statements made about Sprouse even though they

were false because Sprouse did not prove actual malice,

as that term is judicially defined in the law of libel by

New York Times.

This appeal presents a question of first impression in the

United States with regard to the law of libel in light of

New York Times v. Sullivan, supra. The basic issue con-

cerns whether evidence indicating that a newspaper fore-

swore its role as an impartial reporter of facts and joined

with political partisans in an overall plan or scheme to dis-

credit the character of a political candidate is relevant in

determining whether the newspaper acted in reckless and

willful disregard of the truth when it published grossly

exaggerated, defamatory headlines which were unsupported

by the factual recitations in the body of the story. This

Court holds that once an overall plan or scheme to injure

has been established, an unreasonable deviation between

headlines and the remainder of the presentation is in and

of itself evidence of actual malice, which, along with other

evidence, supports a jury verdict for libel.

In addition to defendant’s First Amendment defenses

including an allegation that the damages are excessive,

defendant also assigns myriad procedural errors among

which the Court considers three to be fairly raised. The

first assignment of error raises the question of whether

venue was properly laid in Fayette County; the second

assignment presents the question of whether a previous

action begun in Kanawha County alleging the same set

of facts and dismissed under Rule 12(b)(6) W.Va. ROP

was an effective bar to the present action in Fayette

County; and, the third assignment of error concerns the

failure of the trial court to give two jury instructions. }

1 The Court has considered in detail the following additional as-

signments of error raised by petitioner, namely, that the trial court

erred: (1) in overruling petitioner’s objection to plaintiff’s use

and display before the jury throughout the course of trial of

“‘placards’’ or ‘‘blowups’’ of the publications in question; (2) in

denying petitioner’s motion for a mistrial made at the conclusion

of the opening statement of counsel for plaintiff on the ground of

improper remarks by counsel; (3) in permitting the admission of

certain tangible and testimonial evidence; (4) in permitting coun-

sel for plaintiff to question witness Robert Mellace as a hostile

witness; (5) in giving and reading to the jury plaintiff’s instruc-

tions numbers 1, 2A, 3, 5, 7 as amended, 8B, 10, and 10A; (6) in

refusing petitioner’s instructions numbers 1, 2, 6, 10, 15, 16, 18, 20,

21, 22, 23, and 24 and part of 3; (7) in refusing to submit special

interrogatory ‘‘A’’ to the jury; (8) in permitting plaintiff’s coun-

RASA Bs PPE ORME TEI LION EEE CIEE AONE EEG SIIB LN

This Court finds that there was no reversible error com-

mittted, and further finds that although the $750,000

damage award is excessive, the plaintiff proved libel in

this case. Accordingly, the judgment is reversed in part

and affirmed in part and the case is remanded to the Cireuit

Court of Fayette County with instructions to enter

judgment for $250,000 actual damages plus interest and

costs and to strike as a matter of law the award of

$500,000 punitive damages.

Under the mandate of New York Times v. Sullivan,

supra, it is incumbent upon an appellate court in de-

termining the validity of a libel judgment both to consider

the law and to make an independent evaluation of the

evidence to insure First Amendment protection to pub-

lishers. A candidate for political office is governed by the

same stringent rules with regard to recovery as a public

official. Monitor Patriot Co. v. Roy, 401 U.S. 265 (1970).

In order for a political candidate to recover for libel against

a newspaper it is necessary that the candidate prove actual

malice, i.e., prove either that the newspaper published

false or misleading defamatory statements knowing that

they were false or misleading, or that the newspaper pub-

lished such statements with a reckless and willful dis-

regard for their truth. Monitor Patriot Co. v. Roy,

supra.

In the law of libel the word ‘‘malice’’ has an entirely

different connotation from its general meaning in other

areas of tort law. Cantrell v. Forest City Publishing. 95

S.Ct. 465 (1974). In libel actions ‘‘malice’’ does not con-

note the mere dislike of one party for another or the intent

sel to exhibit to the jury during closing argument special inter-

rogatory “B’’; (9) in denying petitioner’s motion for a mistrial

made at conclusion of closing statement by counsel for plaintiff on

the ground of improper remarks by counsel. Upon consideration

the Court is of the opinion and does find that the assignments are

without sufficient merit to be considered fairly raised, and accord-

ingly the above assignments are summarily dismissed.

of one party to injure another, It is acknowledged, for

example, that a political campaign necessarily involves

intent on the part of one political group to ‘‘injure’’ op-

position candidates by depriving them of elective office.

In libel law ‘‘malice’’ has a much narrower definition and

requires not only deliberate intent to injure, but also an

intent to injure through the publication of false or mis-

leading defamatory statements known by the publisher or

its agents to be false, or an intent to injure through pub-

lication of such defamatory statements with reckless and

willful disregard for their truth.

Consequently, in order for the evidence in this ease to

withstand appellate review it is necessary that the plain-

tiff, Sprouse, demonstrate that the defendant Daily Mail

knew that the defamatory material contained in the articles

it printed was false or for plaintiff to demonstrate that the

Daily Mail was reckless and willful in its indifference to

the truth of the printed material. In this regard the case

sub judice is unique in the annals of reported libel cases

because it primarily involves the deliberate use of mis-

leading words in oversized headlines rather than outright

false statements. For example, the use of the headline

words ‘“‘land grab,’’ ‘“‘dummy firm,”’ ‘*bonanza,’’ ‘‘dis-

closed,’’ and ‘‘cleanup”’ are not libel per se and are all

susceptible to varying interpretations, Obviously, the dis-

covery of a five dollar bill on the sidewalk by a vagabond

is a ‘‘bonanza,’’ while a similar discovery on the part of a

senior executive is not a ‘“‘bonanza.”’ However, there is

one headline over a story quoting plaintiff’s opponent,

Arch A. Moore, Jr., ‘‘Dummy Firm Seen Proving Corrup-

tion,’’ which is probably libel per se.

The defendant argues that most of the material published

was true in that: (1) Sprouse was the president of a

New York corporation; (2) the corporation was engaged

in land dealings in Pendleton County; (3) the corporation

was making profits; and (4) the owner of Seneca Rocks

ead De ee En a So

was offered a small sum for his property. Consequently

the plaintiff’s cause of action must be grounded not in the

basic substance of the articles but rather in the dramatic

and misleading defamatory characterization of mundane

facts, primarily in headlines, which would lead the ordinary

reasonable mind to a false conclusion.

The evidence strongly supports a jury inference that

the defendant knew the conclusions to be drawn from the

headlines were false and further that the defendant

anticipated that these false conclusions would logically

follow from its presentation. The Court’s decision in

this case, therefore, concerns two separate questions re-

garding the headlines. First, the question must be re-

solved concerning whether the headlines taken alone can

be considered defamatory without regard to mitigating

material in the body of the story, and second, the question

must be resolved concerning whether the mere existence

of misleading headlines unsupported by the body of the

story is evidence of intent to injure through publication of

false, defamatory statements known a% the time of publi-

cation to be false.

The evidence in this case presents a problem which might

be better analyzed with reference to a hypothetical situa-

tion. Let us suppose that a public figure, John Doe, fre-

quently participated as a leader for a Boy Scout troop and

as a coach in a Little League baseball program. If those

facts are beyond dispute, is it nevertheless libel for a news-

paper to describe Mr. Doe’s participation in those pro-

grams under a headline ‘‘Doe’s Association with Young

Boys Seen as Suspect’’? The law appears to be that the

truth of the facts presented under the headline would not be

a defense to libel, because the obvious intent of the head-

line is to convey a suspicion of homosexuality which is

defamatory and an unreasonable inference from the

observed facts. Although such a headline is not libel

per se it would have the same effect as the simple state-

i 9a

ment ‘‘Doe is a homosexual’? which would be libel per se.

In the simple hypothetical ease, which is in all respects

parallel to the case sub judice, the existence of such a head-

line unsupported by facts leading to an inference of homo-

sexuality is evidence which may be considered by a jury

on the question of malice. While alone the inconsistency

between the headline and story would not be sufficient to

support a libel action, such inconsistency would be one

valid link in the chain of proof necessary to support a

claim of (1) a false statement, (2) defamatory in nature,

(3) known at the time of publication to be false, and (4)

published with an intent to injure. Obviously, in the

absence of other evidence demonstrating a plan or scheme

to injure, mere lack of reasonableness with regard to the

headline being a fair summary of the story, or even gross

negligence, would not sustain a cause of action by a ean-

didate for office. Gertz v. W elch, 418 U.S. 323 (1974).

In the case at bar the evidence disclosed that approxi-

mately two weeks before the publications in question,

William Loy, then campaign manager for Arch A. Moore,

Jr., Sprouse’s election opponent, and Norman Yost, media

manager for the Moore campaign, visited the office of the

Charleston Daily Mail with information that Sprouse had

engaged in land transactions in Pendleton County, West

Virginia, through a corporation known as Selmet Proper-

ties, Inc. Loy and Yost conveyed this information to Jack

Maurice, Robert Mellace, and Vineent J ennings, all editors

of the defendant newspaper. On October 22, 1968, accom-

panied by members of the Moore campaign staff, Mellace

went to the U. S. Forest Service office in Elkins, West

Virginia and spoke to the senior officer in charge. While

in Elkins, Mellace also spoke with the land officer who had

negotiated an acquisition of 1,385 acres from Selmet

Properties by Nature Conservance, Ine., a non-profit cor-

poration in Washington, D. C., organized to buy land which

federal agencies wish to acquire for public recreational

purposes. Nature Conservancy buys the land and later

—— ee CESARE DT TBM Mh RLOR, RE RIANA KNPC wen Bone Noten PENH) DES BOTY RN Panay

10a

sells it at a cost to the agencies when such agencies acquire

the necessary funds.

Mellace learned from his trip to Elkins that a corpora-

tion named Selmet Properties, Ine. was incorporated in the

State of New York February 25, 1965, by Jerome Gromet-

stein, a New York attorney. He further learned that the

principal office of the corporation was in New York City,

and that Selmet had purchased approximately 2,900 acres

of land in Pendleton County from Henry Regnery on March

12, 1966 for $134,620. Mellace then diseovered that

through June 7, 1966 Selmet had sold seven parcels of land

to various individuals, and had violated West Virginia law

by buying and selling land before Selmet qualified to hold

property and do business in West Virginia. Papers later

filed in the office of the West Virginia Secretary of State

on August 25, 1966, more than two years before publication,

qualifying Selmet to do business in West Virginia, were

signed by Sprouse as president of Selmet, and the principal

West Virginia office was then listed as 700 Terminal Build-

ing, Charleston, West Virginia, where Sprouse practiced

law.

Mellace went to the Pendleton County Courthouse and

determined that after Selmet sold 1,385 acres to Nature

Conservancy for $81,364, there appeared to remain 400 acres

from the original Regnery purchase. At the time of Mel-

lace’s investigation the total income of record derived by

Selmet from sales of the Regnery property was $182,796.25

or approximately $48,176.75 more than its purchase price

for the land. There is no evidence in the record that Mel-

lace did not honestly believe that there were still several

hundred acres left in the original tract, although at trial it

was demonstrated that only 87.09 acres actually remained.

The plaintiff was unable to negate the fact that subtraction

of the out conveyances of record from the total acreage

stated in the original Regnery tract deed appeared to leave

approximately 400 remaining acres, and therefore Mellace’s

lla

good faith belief in his calculations at the time of publication

was not called into question.

Consequently, in the defendant’s favor there was evidence

that the newspaper believed the following facts: (1) Selmet

Properties, Ine. was incorporated in New York State; (2)

the corporation had conducted several routine transactions

in West Virginia before qualifying to do business in the

State; (3) after qualifying to do business the corporation

had sold 1,385 acres of land to Nature Conservancy, Ine. for

$81,364; (4) at the time of publication the corporation had

made a profit of $48,176.75 of its initial investment; (5)

Sprouse was president of the corporation; and, (6) there

appeared to be several hundred acres of land still remaining

in the original tract.

In support of plaintiff’s case, however, the defendant

newspaper also knew; (1) Sprouse had never hidden his

participation in the corporation ;? (2) there was no “inside”?

? Testimony of plaintiff James M. Sprouse on cross-examination:

Q. Now, early in the campaign, Mr. Sprouse, I believe in

March, 1968, you made a public disclosure of what you said

was an itemization of your income during the years 1963 to

1966, an itemization of your assets, including real property,

stocks, and some personal property, even including an auto-

mobile; is that correct ?

A. I issued such a statement, sir, I don’t know the date.

(Defense counsel then read aloud the text of a news article printed

in the Charleston Gazette, a rival newspaper of the Daily Mail in

Charleston, which contained an extensive list of Spouse’s assets

and income, among which was included the item ‘interest in for-

estry acreage, Pendleton County, $10,000.’’)

Q. Now, would you not admit or agree with me on reflection,

and after the event, had you disclosed to the public in that re-

lease March of 1968, that you owned a certain percentage

of the shares of stock of Selmet Corporation which owned a

large tract of land in Pendleton County, which it had pur-

chased at a cost of $134,000, and that the corporation owed

— AD e GA, i atl Ee RS ORES ee eT a el eh

Ny sia res r

12a

information available to Sprouse which was not generally

available; (3) the corporation had qualified to do business

before engaging in any major transactions and was qualified

to do business at the time of publication; (4) out-of-state

firms frequently do legitimate business in West Virginia;

(5) Sprouse was in no way connected with or responsible

for the small offer made by the U.S. Government for the

purchase of Seneca Rocks from the local owner; and (6)

the remaining land owned by Selmet Properties was at least

five miles from the Seneca Rocks landmark which was pic-

the bank a certain sum of money, making the net value of the

value of your stock, a certain figure, that you would never

have had these news stories in this campaign?

A. No, sir, I don’t agree with you on that. I think no

matter what I had put, if I had put that same information,

the Daily Mail could have done the same hatchet job based

on that same information.

Q. But, you see, in this story you said you, James Sprouse,

had interest in forestry acreage in Pendleton County, value of

$10,000. Now, would not the ordinary person construe that

to mean that you, as an individual, owned some real property

which was primarily of value only for timber and that it would

be in your name on the property books, either alone or with co-

tenants? ?

A. I can’t say what the ordinary person would think, Mr.

Chambers. My intention was to give a fair disclosure of

what I owned there, and that’s what I tried to do. I think at

the time it was just about the value of the investment I had.

Q. Where did you publicly reveal your connection with

Selmet Corporation before it became public knowledge on

August 24, 1968?

A. In 1968?

Q. Yes.

A. When I registered—we registered with the Secretary of

State and my name was listed as an officer. I signed all of

these deeds as president. That was a public record. And when

I signed all of these deeds, this was a publie record. When I

applied for a loan at the bank and we told them what it was

for, everybody that wanted to know anything about it, obvi-

ously. I was proud of being associated with it. It wasn’t any-

thing I wanted to conceal.

13a

tured in the newspaper photograph under the caption

‘*Where Governor Candidate ‘Cleans 2-7"

On October 24 and 25, 1968, the Charleston Daily Mail

published a series of articles with very large headlines as

follows:

‘‘PENDLETON REALTY BONANZA

BY JIM SPROUSE DISCLOSED”

‘‘Cleanup of Nearly $500,000 in View”?

**Seneca Rocks Tourist Project Property

Enriching Candidate Sprouse’?

‘‘Sprouse Owns Choice Land Beside $30

Million U.S. Resort”?

In addition to the Daily Mail’s own commentary with re-

gard to the land transaction, the paper printed extensive

comments from Sprouse’s opponent, Arch A. Moore, Jr.,

casting aspersions on Sprouse’s honor and integrity. The

largest headline in this regard said:

3 This conclusion with regard to the evidence is either supported

in the body of the articles themselves or from testimony at trial.

Testimony of Robert Mellace :

Q. Getting back . . . the story says ‘‘cleans up’’, ‘‘ WHERE

GoveRNor CaNnpipate ‘CLEANS Up’ ”’, October 25th.

A. The headline.

Q. The headline over Seneca Rocks, where Sprouse cleans

up.

A. That is what it Says.

Q. It is over a picture of Seneca Rocks, isn’t it?

A. Yes.

Q. He [Sprouse] didn’t even own Seneca Rocks, did he?

A. I don’t think—Mr. Harper owned the Rocks, I think.

Q. Mr. Mellace, are you telling the Court and jury that

people reading ‘‘Wuere Governor CANpIDATE ‘ SLEANS Up’ ’’

would not think it referred to the picture?

A. The general area.

Q. The general area is 10 miles from Seneca Rocks.

A. That’s the general area,

l4a

‘““MOORE ASKS FEDERAL PROBE IN SPROUSE’S

LAND GRAB”’

followed in smaller headlines by a statement which was libel

per se:

‘**Dummy Firm’ Seen proving Corruption”’

In the October 25th edition of the Mail there appeared a

composite picture of Seneca Rocks with the large headline:

‘“‘WHERE GOVERNOR CANDIDATE ‘CLEANS UP’ ”’

below which appeared a picture of an obviously worthy

looking country gentleman and a story headlined ‘‘ Fortune

To Jim Sprouse But Pittance For Seneca’’ implying that

the gentleman in the picture was suffering financially as a

result of improprieties on the part of candidate Sprouse.

There is no evidence in the record offered by the defend-

ant that any member of the Daily Mail staff had reason to

believe that Sprouse was actually engaged in a fraudulent

transaction. Although to persons untrained in business,

* Testimony of Mr. Jack Maurice, one of the editors of defend-

ant newspaper, who reviewed the articles prior to publication :

Q. Now, Mr. Mellace [sic]—Mr. Maurice, you agree, do you

not, and you concluded after investigation, that there was no

advance or inside information that Judge Sprouse was the

beneficiary of in connection with the land purchase and sub-

sequent sales in the Pendleton land area?

A. We concluded that we had nothing to suggest that he

had any advance information.

Q. And you had nothing to suggest that that transaction,

the purchase and sale of real estate in Pendleton County was in

any way tainted with illegality or criminality of any kind;

that’s true, isn’t it?

A. That is true, sir.

Q. You don’t contend that?

A. No, sir.

Testimony of Mr. Robert Mellace, editor of defendant newspaper

and author of the articles complained of :

Q. As I understand it, Mr. Mellace, you don’t contend that

Judge Sprouse had inside, advance information on this prop-

erty, do you?

A. No, sir, I don’t contend that.

15a

the existence of an out-of-state corporation might appear to

be a “‘dummy firm,’’ the jury were entitled to infer from all

the evidence presented that the staff of the Daily Mail

deliberately characterized a legitimate corporation by the

pejorative term ‘‘dummy firm”? to conjure up the image of a

conduit for illegal money when the defendant knew for an

absolute certainty that the business was routine and legiti-

mate.

The parties have cited numerous cases concerning

whether headlines should be considered as an integral part

of the news story, DeHusson v. Hearst Corporation, 204 F.

2d 234 (7th Cir. 1953), Afro-American Publishing Co. v.

Jaffe, 366 F.2d 649 (D.C.Cir. 1966), or may be considered

separately on the issue of whether the statements in ques-

tion are defamatory. Empire Printing Co. v. Roden, 247 F.

2d 8 (9th Cir. 1957), Las Vegas Sun v. Franklin, 329 P.2d

867 (Nev. 1958). The Court is of the opinion that no clear-

cut rule has been established in this regard for headlines

which are not libel per se, and therefore, each case must be

considered on its facts. Generally where the headline is of

normal size and does not lead to a conclusion totally unsup-

ported in the body of the story, both headlines and story

should be considered together for their total impression.

However, where oversized headlines are published which

reasonably lead the average reader to an entirely different

conclusion than the facts recited in the body of the story,

and where the plaintiff can demonstrate that it was the

intent of the publisher to use such misleading headlines to

Q. You don’t contend, do you, Mr. Mellace, that way back

in February, 1965, when this corporation was formed by Mr.

Sprouse and a [former] classmate at Columbia [University

Law School], that it was done for the purpose of buying real

estate to sell to the U.S. Government? Do you contend that?

A. No, sir.

Q. Let me ask you something, Mr. Mellace: Do you contend

now that this corporation was formed or connected with any

Act of Congress passed in March, 1965?

A. No, sir.

ee RETR DERL Ser ene TEeR nae Ronee

16a

create a false impression on the normal reader, the head-

lines may be considered separately with regard to whether

a known falsehood was published. As the court said in

Afro-American Publishing Co. v. Jaffe, supra, at p. 655

‘‘[w]hat counts is not the painstaking parsing of a scholar

in his study, but how the newspaper article is viewed

through the eyes of a reader of average interest.’’

It is important that this entire case be viewed against a

background of events which occurred in West Virginia

during the late 1960’s when rather widespread corruption

was exposed in State government. This corruption ulti-

mately led to federal prison terms for numerous high-

ranking officials, including a former Governor and a former

Attorney General of West Virginia. Therefore, the public

was particularly sensitive to allegations of political graft.

The record sustains the jury inference that it was the intent

of the editors of the defendant newspaper to take advantage

of the climate of the times with regard to public sensitivity

concerning graft to further the ends of their own candidate,

Arch A. Moore, Jr. by impugning the integrity of the

plaintiff, Sprouse. °

5 Testimony of Robert Mellace, editor of defendant newspaper

and author of the news stories complained of :

Q. Did you come about it[the story of the land transactions]

originally by way of investigation?

A. No, I did not.

Q. As a matter of fact, did it not come from William Loy

and Norman Yost, who at that time were directors and man-

agers of the Republican campaign who came to your office

and gave you information they wanted to have published? That

is true, isn’t it?

A. They did come to my office. What their titles were, I

don’t know. I know both of them were working for Arch

Moore, and today continue to work for the Governor. I think

Yost was his publicity man and Mr. Loy was his campaign

director. Mr. Yost has a newspaper background and Mr. Loy,

a lawyer, worked in Washington with the Governor when he

was a congressman. That is true, they did come to me, yes,

sir.

17a

The Supreme Court of the United States has given very

little guidance with regard to a situation of this type. Re-

Regarding the state-wide circulation of the stories about Sprouse

to other newspapers, Mr. Mellace testfied as follows:

Q. Mr. Mellace, when you published this first story, rather

after this story was written and before it was published, did

you have occasion to show it to Mr. Yost ?

A. I showed Mr. Yost a carbon copy of it.

Q. That was before it was published ?

A. It was before it appeared in the Daily Mail, like, well, an

hour and a half.

Q. And he was one of the [Moore] campaign aides who

planted the story with your newspaper ?

A. He was one of those who suggested there might be a

story, yes, sir.

* * * * *

Q. And you gave it to him so he could get circulation by

sending it to other newspapers, didn’t you?

A. Well, yes. He asked us if it would be all right if he

called other newspapers. We told him it would be all right

if it was a paper that would not appear before the Daily

Mail. After it appeared in the Daily Mail, we didn’t care who

used it.

Q. You don’t normally and routinely do that, give Mr.

Yost the story Daily Mail writes for publication in other

papers, do you?

A. This was not a routine story.

* * * * *

Q. I am talking about routine practice, you don’t routinely

give Mr. Yost your publications to have him disseminate them?

A. This is the only time that has ever happened.

Testimony of Mr. Norman Yost, publicity director in the cam-

paign of Arch A. Moore, Jr., the plaintiff’s opponent in the

gubernatorial election, and one of the men who took information to

the defendant newspaper for publication :

Q. Mr. Yost, when did you first come about the information

that Judge Sprouse owned an interest in real estate in Pen-

dleton County ?

A. The first information came about eight weeks, possibly

ten weeks before the election in the form of rumor or of some-

body reporting this information.

Q. ... After vou received this information, did you have

oceasion to go to any newspaper and seek its publication?

A. This information, basically, was provided by Mr. Loy.

— 2 ie a ch ne TR cate eee ee ee a

aaa a a - :

18a

ported U.S. Supreme Court cases almost exclusively con-

cern newspapers operating as independent, news-gathering

agencies. The purpose of First Amendment protection for

newspapers as interpreted by the U.S. Supreme Court is to

engender wide-open, robust, and uninhibited political dis-

cussion. New York Times vy. Sullivan, supra. Therefore,

the Court holds that it is relevant to this case that the Daily

Mail did not publish the stories in question exclusively as a

news-gathering agency.

The cases of Curtis Publishing v. Butts, and its compan-

ion case, Associated Press v. Walker, 388 U.S. 130 (1967)

And when Mr. Loy had secured certain documents that he

felt were vital to the campaign, I did go to the Charleston

Daily Mail.

Q. Now, Mr. Yost, how many times did you personally visit

and speak with the editor or associate editor, or any officials

of the Daily Mail about publication of this story?

A. This particular story?

Q. Yes.

A. I had one conference in which Mr. Loy, Mr. Jennings,

Mr. Maurice, Mr. Mellace was present, and I believe that was

the only time I was there for this purpose or any connection

therewith.

Q. And when you received the story, what did you do with

that story?

A. ... I immediately called my staff together and asked

them to help me distribute this story throughout the State.

Q. Could you tell us what newspapers, and I see you didn’t

bring notes with you, but as best your memory can serve you,

can you tell us what newspapers carried this story that you

and your staff circulated?

A. ...I1 didn’t have a clip sheet at this time of the news-

papers that did, but I assume that we hit every afternoon

newspaper. That would be our purposes.

Q. And I take it, as an experienced news man, you knew

what newspapers to call to give the story to?

A. Yes, because a news story, it is something that has to be

delivered fresh. And if it is not fresh it is not news.

19a

stand for the proposition that when a newspaper departs

from an attempt to report the news objectively, the fact of

such departure can be considered by the jury and an appel-

late court in determining whether there was willful disre-

gard of truth. In Walker the Associated Press received

incorrect information from a correspondent who was pres-

ent at the scene of events and who gave every indication of

being trustworthy and competent. The Court reversed a

judgment in favor of General Walker and held that a pub-

lic figure may recover damages for defamatory falsehood

only on a showing of highly unreasonable conduct constitut-

ing an extreme departure from the standards of investiga-

tion and reporting ordinarily followed by responsible pub-

lishers. Therefore, the Supreme Court held that the As-

sociated Press was not liable for publishing an isolated de-

famatory dispatch concerning General Walker when it was

operating under acceptable standards of good journalism.

The issue in Walker, therefore, can be distinguished from

the issue presented in the case at bar in that in Walker

there was no evidence of participation by Associated Press

in a plan or scheme to injure Walker.

The facts in the case at bar are far closer to the facts of

Curtis Publishing where recovery was sustained by the

Supreme Court partially because of the publisher’s per-

sonal motives for printing the libel. In Curtis, a ease in-

volving a defamatory story about a football coach which

appeared in The Saturday Evening Post, the Supreme

Court sustained recovery by the plaintiff because the Post

had deviated from generally accepted standards of respon-

sible reporting in order to print a sensational story. Al-

though it was not demonstrated that the Post knew the

statements were false, the evidence disclosed that the Post

had published highly defamatory statements upon very un-

reliable evidence. As Mr. Justice Warren characterized the

facts in his concurring opinion:

“Apparently because of declining advertising reven-

ues, an editorial decision was made to ‘change the

2 meter RON EIEN Og Oe LE MRT IOS f SR

” stein i Been eee Pee ee ee i She “ ~

20a

image’ of the Saturday Evening Post with the hope that

circulation and advertising revenues would thereby be

increased. The starting point for this change of image

was an announcement that the magazine would embark

upon a program of ‘sophisticated muckraking,’ de-

signed to ‘provoke people, and make them mad.’ ”’

This Court recognizes that recent cases would appear to

withdraw from the standard of ‘highly unreasonable con-

duct’ enunciated by Curtis. Dicta in the recent opinion in

Gertz v. Welch, supra, indicates that mere deviation from

accepted standards of journalism alone will not support an

action for libel brought by a public figure. Nevertheless

when Walker and Curtis are read together they still stand

for the proposition that personal motives on the part of a

newspaper, or participation by a newspaper in a plan or

scheme to injure, is evidence of recklessness and willful dis-

regard for truth which may be considered along with other

evidence on the question of actual malice.

The information gathered by the Daily Mail reporters

contained no facts indicating that Sprouse had engaged in

anything other than a normal business transaction and

there was no evidence discovered by the defendant at the

time of publication of inside information as a result of

political affiliation. In summary, the testimony at trial

contained no evidence that the reporters of the Mail at the

time of publication believed there existed any impropriety

whatsoever.®

6 Testimony of Mr. Marvin N. Marshall, who at the time the

articles were printed was Land Staff Officer of the Monongahela

National Forest, and who was one of the federal officials to whom

Mr. Mellace spoke during his investigatory trip to Elkins:

Q. Did Mr. Mellace make any statements, or did he ask any

questions of you or of Mr. Olliver, in your presence, regarding

the transaction which is the subject of this lawsuit?

A. Yes, sir.

Q. What were those questions?

A. The questions concerned the amount of acreage in the

transaction, the amount of land that was left in the ownership

of Selmet Corporation, and values of the land.

—

;

| 21a

The conceptual difficulty in this case arises from the abil.

| ity of different people to draw varying inferences from ob-

servation of the same set of facts. For example, it is pos-

| sible for one person to observe a man running from a bank

and conclude that he is involved in a bank robbery and for

another person to observe the same act and conclude that

the man is late for an appointment. Much discussion in

politics and government concerns different conclusions de-

rived from observation of the same random facts. Accord-

ingly, great latitude must be given a newspaper to report

observed facts and to make legitimate, negligent, or even

grossly negligent inferences from those facts. Had the

Charleston Daily Mail confined itself to reporting the facts

Q. Do you know how many acres that tract consisted of?

That is, in the residual?

A. 87.09.

* * * * *

Q. Was there any discussion, either statements made or

questions asked by Mr. Mellace on that occasion regarding the

acreage still belonging to Selmet ?

A. Yes, sir.

Q. What were those, or what was that?

A. Mr. Mellace indicated there was larger acreage than that

residual, and I attempted to show him from our records that

there was less acreage than that, than that he indicated.

Q. Did you tell him what acreage was left?

A. I told him, in my opinion, it was less than 100 acres.

Q. Did he indicate to you . . . how many acres he thought

was left?

A. Approximately 400 acres.

Q. Now did you, sir, have a discussion with him as to the

value per acre, or otherwise, of the residual tract?

A. Yes, sir.

Q. What was that discussion ?

A. He indicated the values were around $1,000 an acre, and

I indicated that, in my opinion, having seen land sell in that

area, that it would be nearer $500 per acre.

* * * * *

Q. Now, insofar as-Mr. Mellace in his story, Mr. Olliver

[sie], I don’t find any place he quotes you, but insofar as it

quotes Mr. Olliver, or attributes statements to the Forest Serv-

ice, is this story basically accurate?

A. Not in my opinion.

_—_—

—— YR ee ms MELROSE LINER TOT IN Ne MM ene

22a

of the Pendleton County land transactions in temperate

terms, and, had it stated that further investigation might

prove this transaction suspect, the Mail would have been

protected under the First Amendment. Monitor Patriot

Company v. Roy, supra. Defendant would even have been

protected from liability for negligent misleading headlines,

but not from intentional misleading headlines.

Obviously, as the U.S. Supreme Court frequently notes,

there is great tension between (1) government by free dis-

cussion as assured by the First Amendment, and (2) the

protection of individuals from libel. Historically since New

York Times the clearest legal principle emerging from a

reading of libel cases is that each case must be considered

by an appellate court on its facts with a strong sympathy

toward protection of the robust political discussion contem-

Testimony of Mr. Robert Mellace:

Q. As a matter of fact, this company, even though it did

qualify after it began to sell properties, was licensed to do

business in the Office of the Secretary of State in the State of

West Virginia; you had that information didn’t you?

A. Yes.

Q. Bill Loy gave that to you?

A. Either that or I acquired it myself... .

Q. As far as the records of the Secretary of State are con-

cerned, nothing Judge Sprouse did concealed his identity or

connection with the Selmet Company, did it?

A. Not to my knowledge, no, sir.

Q. Insofar as your word ‘‘disclosed,’’ there was nothing to

suggest that Judge Sprouse in qualifying that company did

anything to submerge his identity in any fashion or character,

was there?

A. I completely accept responsibility, Rudy, for these head-

lines, but I did not write them.

* * * * a

Q. Mr. Mellace, absent any available knowledge and absent

any inside information, do you admit that this was a legitimate

real estate transaction . . .?

A. It was basically legitimate as far as I know, and I

never said otherwise.

SR eee

Stakes Sapa Eee

aia

SATE PUR? RUSE RTE LS Are NL peek: Ce Ll A es

23a

plated by the First Amendment. At some point, however,

cumulative evidence will show that the line of protection

is breached, and a jury. must be permitted to find malice,

unless we are to adopt the position, articulated by Mr. Jus-

tice Black and Mr. Justice Douglas, that proper application

of the First Amendment provides an absolute defense for

the press to all defamation actions.’

In the case at bar the defendant crossed the line. The

evidence supports a jury inference that the Mail went be-

yond drawing conclusions from observed facts and know-

ingly used the pretext of a legitimate business transaction

to lead the electorate to what it again knew to be a false

conclusion. Use of headline words such as ‘*bonanza,”’

‘‘disclosed,’’ and ‘‘cleanup,’’ demonstrate an intent on the

part of the newspaper to capitalize on the well known habit

of newspaper readers of reading only the headlines. The

defendant demonstrated that the headlines were written by

news staff other than the authors of the stories, but Cantrell

v. Forest City Publishing, supra, holds that once an overall

scheme of recklessness has been demonstrated, respondeat

superior applies in libel as well as other areas of tort law

and the publisher is liable for the acts of employees. The

defendant did not demonstrate that Mellace was ignorant

of the content of the headlines before they were published,

and the jury were entitled to infer that even if Mellace were

ignorant of misleading headlines before publication on the

24th, those headlines were effective notice of the problem of

irresponsible headlines which recurred in the publication of

similar misleading headlines on the 25th.

7™See: New York Times v. Sullivan, 376 U.S, 254 (1964), Black

concurring, at p. 293; Garrison v. Louisiana, 379 U.S. 64 ( 1964),

Black concurring, at p. 79, and Douglas concurring, at p. 80;

Rosenblatt v. Baer, 383 U.S. 75 (1966), Douglas concurring, at p.

88, and Black concurring and dissenting, at p. 94; Curtis Publish-

ing Co. v. Butts, 388 U.S. 130 (1967), Black concurring and dis-

senting, at p. 170.

24a

The story in the October 25th edition of the Mad in

which there appeared a picture of a worthy country gentle-

man, Mr. D. C. Harper, with the headline ‘‘ Fortune to Jim

Sprouse Pittance for Seneca’’ and the sub-headline ‘* Land-

mark’s Owners Plan Court Fight Against Deal,’’ supported

a jury conclusion that there was a deliberate effort to imply

that the profit to Sprouse was acquired at the expense of an

honest farmer, rather than in a wholly independent trans-

action. The Mail was unable to demonstrate that either Mel-

lace or any other member of its staff had reason to believe

at the time of publication that Mr. Harper in any way suf-

fered as a direct result of Selmet’s dealings with Nature

Conservancy, Inc. Therefore, the plaintiff proved that this

story was false or misleading, and that it was published with

knowledge that it was false or misleading.®

This Court is concerned that our decision in this case may

ultimately result in self-censorship by newspapers. Partic-

ularly in West Virginia, where a large portion of the State

is served by newspapers which lack substantial financial

assets, the threat of potential libel actions becomes repres-

sive, not only because of possible judgments but also because

of the inordinate legal expenses normally incurred in de-

fending a protracted libel suit. Therefore it should be em-

phasized that the Court sustains the jury’s finding of libel

in this case because the plaintiff proved that the newspaper

® Testimony of Mr. Robert Mellace:

Q. Now, I am asking you sir, isn’t it true that D.C. Harper

did not plan any court fight against any deal that this has

reference to?

A. Not to my knowledge.

Q. As a matter of fact, Mr. Mellace, that story or that head-

line was printed, ‘Landmark’s Owners Plan Court Fight

Against Deal,’ so that the common interpretation would be

that he was planning a court fight against Judge Sprouse,

wasn’t it?

A. Well, my interpretation of that was that he was planning

a fight against the U.S. Forest Service for not giving him

enough for his land. I never connected Mr. Harper with the

fight against Judge Sprouse’s firm.

25a

abdicated its traditional role of fairly reporting the news

and became a participant in a scheme or plan, the object of

which was to employ grossly exaggerated and patently un-

true assertions, embodied primarily in headlines, to destroy

the character of Sprouse.® it appears from the evidence that

* The testimony of Mr. Robert Mellace supports this conclusion.

Re: ‘‘Disclosed.’’

Q. Now, Mr. Mellace, the word “disclosure”? is used in your

news story. I speak specifically now, of the headline appear-

ing on October 24, 1968: ‘Pendleton Realty Bonanza by

Jim Sprouse Disclosed,’’

A. Yes, that is there.

* * * ~ .

Q. As far as the records of the Seeretary of State are con-

cerned, nothing Judge Sprouse did concealed his identity or

connection with that Selmet Company, did it?

A. Not to my knowledge, no, sir.

* * * ® *

Q. ‘‘Disclosure,’’ you would agree, suggests there was some-

thing to be disclosed that the public didn’t know about, isn’t

that true?

A. Yes, sir.

* * * * *

Q. Would you admit that there was no effort on behalf of

James M. Sprouse to conceal or submerge his identity up

until the time of the story?

A. I don’t know of any.

- * * * *

Re: ‘‘Land Grab.’’

Q. The story planted by the campaign, and that was the

story of October 24, 1965 [sic], and he called a press confer-

ence, and you printed and published a statement he made—I

am talking now about the story of October 25th, ‘‘ Pendleton

Land Grab.’’ In the headlines you used the words ‘‘Land

Grab’’?

A. The Daily Mail did.

« oe * oO *

Q. And ‘‘land grab,’’ Mr. Mellace, means, does it not, the

seizure of real estate or seizure of land illegally or under-

handed, does it not?

A. I don’t know, again these are not my words.

° a * ° *

PLEO HAT YO RTA SNORE HIE I AI MEN NL OUP UMN CEN

PUPS AERONN HOEM LE

26a

not only did the Mail work closely with the Moore campaign

staff to discover the details of the land transaction, but

also that it fully cooperated in disseminating the articles

to other newspapers for publication throughout the State.

Under those circumstances the difference between the fair

Q. You will agree, will you not, Mr. Mellace that this was not

a land grab? Was it?

A. In the sense that Jim stole land or grabbed it?

Q. Yes.

A. No, but, again, that is not my word.

a * * * *

Seen Dci RIAU abie Cs ata ies Gia talasid a hasniaaa

Re:‘‘Dummy Firm.”’

Q. You published a sub-headline “Dummy Firm Seen

Proving Corruption.’’ Your newspaper published that?

A. Yes, sir. And, again, those are Governor Moore’s words.

Q. You agree, do you not, this was not a dummy firm by

any definition of the word?

Mr. Campers: ‘‘Objection. I think the evidence will

how whether it was or not. I don’t think the witness is

qualified to answer that question.’’

e * * * *

THe Court: ‘‘This objection is overruled. You can

answer the question.’’

* * * » *

A. My definition of a dummy firm or dummy corporation

would be one that was formed covertly to hide the identity of

officers doing business in that corporation, but I can’t make

any conclusion about why this corporation was formed.

I just know in my own mind that it was formed outside the

State of West Virginia and the only business it has done was

in the State of West Virginia. When it first started doing

business in West Virginia, it did not, as required by law, ;

Q. Mr. Mellace, I agree with you, it registered late, but when

it registered, it registered two years and one month before

this property was sold to Nature Conservancy, in August 1966,

and the property was sold in October, 1968.

A. Okay.

* e * *

Q. After it registered with the State of West Virginia it did

not violate laws in the State of West Virginia did it?

A. Not to my knowledge.

RSE ee By ER Satins WINS Macs oY

27a

implication of the headlines as opposed to the supporting

factual recitation of the stories is evidence alone of malice,

which absent evidence to the contrary, supports the jury

verdict.

Re: ‘‘Court Fight.’’

Q. Now, Mr. Mellace, if I might direct your attention to

another story on October 25th. We have here the intro-

duectory headline, ‘‘Landmark’s Owners Plan Court Fight

Against Deal.’’

A. That is what it says.

Q. Now, I am asking you, sir, isn’t it true that D.C. Harper

did not plan any court fight against any deal that this has

reference to?

A. Not to my knowledge.

Q. As a matter of fact, Mr. Mellace, that story or that head-

line was printed, ‘‘Landmark’s Owners Plan Court Fight

Against Deal.’’ so that the common interpretation would be

that he was planning a court fight against Judge Sprouse,

wasn’t it?

A. Well, my interpretation of that was that he was planning

a fight against the U.S. Forest Service for not giving him

enough for his land. I never connected Mr. Harper with the

fight against Judge Sprouse’s firm.

* * * * *-

Testimony of Mr. Wilson Smith, real estate broker from Elkins

who negotiated the sale of the original 2,900-acre Regnery tract

to Selmet:

Q. Mr. Smith,—you are familiar, I take it, with that area,

are you not?

A. Yes, sir.

* * * - is

Q. There is a headline there where ‘‘Governor Candidate

Cleans Up.’’ Does that property contain the Seneca Rocks?

[The news photograph that appeared in Daily Mail Story was

shown to witness] Is that Seneca Rocks on that property ?

A. No, sir.

Q. How far away is the property that you all purchased

from Seneca Rocks or from where ‘‘Governor Candidate Cleans

Up’’?

A. At least five miles—nine miles.

Q. And the Rocks had nothing to do with the property?

A. No, sir.

ee RH EE MORNE NAR Re EIEIO CET HOR UPS EMIT FDP

28a

The Court agrees with the defendant’s contention that

the jury award of $250,000 actual damages and $500,000

punitive damages is excessive. Under the recent U.S.

Supreme Court case of Gertz v. Welch, supra, it is permis-

sible for a plaintiff in the position of Sprouse to recover

punitive damages because of the high standard of proof re-

quired of a candidate for public office to sustain any action

for libel. As it is necessary for a candidate for office to

prove that false or misleading statements were published

with knowledge on the part of the publisher of their falsity

or with willful and reckless disregard of their truth, and

further to prove that they were published with a deliberate

intent to injure, punitive damages may be recovered .

However, regardless of the law of this State, it would

appear that the penumbra of protection of the First Amend-

ment is such that punitive damages may only be recovered

in cases where the award of actual damages is insufficient

to dissuade others in like circumstances from committing

similar acts in the future. The policy embodied in the

First Amendment of encouraging broad dissemination of

public information forecloses an award of punitive damages

which might jeopardize the existence of a newspaper when

such damages are unnecessary to protect the public from

similar conduct in the future or to make possible the vindi-

cation of plaintiff’s rights in the absence of demonstrable

actual damages. In the case at bar the Court is of the op-

inion that an award of $250,000 actual damges is adequate

for the purpose of dissuading publishers from similar will-

ful and reckless conduct in the future. In addition the

Court is persuaded that an award of $750,000 would have a

chilling effect upon the legitimate exercise of First Amend-

ment rights and would lead to the type of self-censorship

which it has been the object and purpose of the United

States Supreme Court to prevent since New York Times v.

Sullivan, supra.

29a

In viewing all of the evidence the Court is of the opinion

that the plaintiff proved $250,000 in actual damages. The

ease of Gertz v. Welch specifically recognizes that actual

loss to a plaintiff in a libel action is difficult to prove in the

same mathematical way that medical expenses or lost earn-

ings can be proven in an ordinary tort action. Mr. Justice

Powell specifically says in Gertz, 418 U.S. at 350:

‘*Indeed, the more customary types of actual harm

inflicted by defamatory falsehood include impairment of

reputation and standing in the community, personal

humiliation, and mental anguish and suffering. Of

course, juries must be limited by appropriate instrue-

tions, and all awards must be supported by competent

evidence concerning the injury, although there need be

no evidence which assigns an actual dollar value to the

injury.’’

Under West Virginia law in an action to recover for an in-

tentional tort, as opposed to a negligent tort, a plaintiff is

entitled to have such elements as mental anguish, insult, in-

dignity, and humiliation considered by the jury in arriving

at an award for actual damages. Addair v. Huffman,

W.Va. , 195 §.E.2d 739 (1973).

The job of determining such intangible and subjective

damages as personal humiliation, mental anguish, and in-

dignity has always been the exclusive province of the jury

subject to the gentle rule that awards in these areas not be

excessive. In light of the amount of jury awards for pain

and suffering which are routinely sustained by appellate

courts in tort actions involving physical injury, and con-

sidering the rank and station in life of the plaintiff at the

time of publication, this Court finds that the award of $250,-

000 actual damages was not excessive.

The defendant in this action objected to venue in Fayette

County, West Virginia, on the grounds that W.Va Code,

59-3-1(¢) [1967] changed the law under which Hanks v.

a SPN SSE UCL LEA AI LEIES SD IPE SY AEN RIESE EIEN OR ELENA ANTNS GO

30a

Beckley Newspapers, 149 W.Va. 552, 142 S.E.2d 727 (1965),

was decided. Hanks held that an action against a news-

paper may be brought in any county in which the cause of

action, or any part of the cause of action arose, although

the defendant is not a resident of that county, if the defend-

ant, or if more than one defendant, one or more of the

defendants, is a corporation under W.Va. Code, 56-1-2

[1923]. The opinion indicated that a newspaper is ‘‘cir-

culated’’ in any county in which editions of the paper are

sold and accordingly a part of the cause of action can be

considered to have originated in any county where the news-

paper is circulated and the libel is published.

W.Va. Code, 59-3-1 [1967] is a statute concerning news-

papers and legal advertisements. Although in subsection

of this Code or law to the contrary a qualified newspaper

shall for all purposes be considered to be published where

it is first placed in cireulation,’’ this Code section does not

define the word ‘‘cireulated’’ in a manner inconsistent with

the Hanks case. Subsection (c) refers to where a news-

paper is published as opposed to where a libel is published.

Although for purposes of legal advertisements a newspaper

is to be considered as ‘‘published’”’ only in the county in

which it is first placed in circulation, thus assuring that

local newspapers will receive adequate support in the form

of legal advertisements, that section in no way changes the

common law definition of where a libel is ‘‘published.’’ Ae-

cordingly we reaffirm our holding in the Hanks ease that

proper venue in an action against a newspaper publishing

corporation lies in any county in which the libel is published.

The defendant asserts that this action in the Circuit

Court of Fayette County was barred ab initio by a previ-

ous dismissal of an action grounded on the same set of

facts and filed in the Cireuit Court of Kanawha County on

October 28, 1968, just three days after the publications in

3la

question appeared in the Daily Mail. In that initial suit

filed in Kanawha County, the defendants submitted a mo-

tion to dismiss on the grounds that plaintiff’s complaint

failed to state a claim upon which relief could be granted

pursuant to Rule 12(b)(6) W.Va. RCP. The motion was

granted by an order entered March 14, 1969, which stated:

“This court is of the opinion to and does hereby

sustain said motions to dismiss of the respective de-

fendants, and, it is, accordingly Orperep that said

action be, and the same is hereby, dismissed for the

reasons set forth in the letter memorandum of opin-

ion of this court dated March 11, 1969, copy of which

is hereby attached, and, it is further Orverep that said

letter memorandum of opinion dated March 11, 1969,

be and the same is hereby made a part of the record,

in this action, to all of which the plaintiff objects and

excepts.’’

It is interesting to note that the letter memorandum of

opinion accompanying this order also dismissed the action

in Kanawha County. But the letter opinion is basically a

critique of the complaint in all its allegations, one by one,

and wile the trial judge concluded that ‘‘the complaint

completely fails to allege even the substance of any matter

which might constitute a basis for this action,’’ the opinion

goes on to describe how a proper complaint for libel could

be drafted indicating the alleged libelous material must

set out in haec verba. The trial judge did not state that

there was no possible way for the plaintiff correctly to

amend the complaint, nor did he state that the dismissal

was with or without prejudice, nor did he expressly grant

the right to amend. This Court is of the opinion that the

trial judge in Kanawha County did not intend to dismiss

the action, but rather intended to dismiss only the com-

plaint. Therefore, while not necessary to the Court’s de-

cision, the Court believes that the peculiar facts of this

ease strengthen our holding that the Kanawha County

action should not operate as res judicata to the subsequent

action in Fayette County.

ere ll as a ee an Te

32a

The plaintiff did not sua sponte seek leave to file an

amended complaint, nor did he, by appeal or otherwise,

seek to have the final order dismissing the action set aside

or modified. Instead, on October 27, 1969, more than six

months after the final order dismissing the Kanawha

County action was entered, plaintiff filed the present suit

in the Cireuit Court of Fayette County alleging similar

facts. Following denial of defendant’s motion to dismiss

for lack of venue in Fayette County, defendant moved for

summary judgment setting forth the final Kanawha County

judgment as a bar. The Fayette County court denied this

motion and the defendant assigns the denial as error.

The issue presented is whether a 12(b)(6) dismissal for

failure to state a claim is a final appealable judgment on

the merits and, therefore, under the doctrine of res judi-

cata, a bar to a subsequent action grounded on substantially

the same facts.

West Virginia law has never squarely met this question,

and when it has met it obliquely the decisions stand in

direct conflict. On the one hand, there is a 1965 opinion

of this Court in U. S. Fidelity & Guaranty Co. v. Eades,

150 W.Va. 238, 144 S.E.2d 703 (1965) which states:

‘‘If a summary judgment is entered under Rule 56

R.C.P. it is a dismissal with prejudice; whereas, a

judgment sustaining a motion to dismiss under Rule

12(b) for the failure to state a claim upon which re-

could be granted is not a dismissal with preju-

ice,’’

On the other hand a 1969 decision, Barker v. The Traders

Bank, 152 W.Va. 774, 166 S.E.2d 331 (1969), provides:

‘«, , . it should be observed that a judgment of dis-

missal of an action under Rule 12(b) or a final sum-

mary judgment under Rule 56, rendered by a trial

court is not here reviewable upon certificate but can

be reviewed by this Court only upon appropriate ap-

pellate process.’’

33a

In addition, search for guidance on this subject in other

jurisdictions is equally unavailing as there is a nation-wide

split of authority concerning whether an involuntary dis-

missal under Rule 12(b)(6) constitutes a bar to a subse-

quent prosecution of a new action alleging similar facts.

The majority view and national trend favors the conclu-

sionary nature of a 12(b)(6) dismissal as a determination

on the merits. This view is based on the policy of protect-

ing defendants from irresponsible forum-shopping by

plaintiffs and on the policy of providing a definite end to

litigation without fear by the prevailing party that actions,

once dismissed, will be brought again. The rationale of

this view is supported by the liberal amendment provisions

of the Federal Rules which have been adopted by many

states, including West Virginia.

The majority rule rests upon the authority of Rule 41(b)

which says in part:

‘Unless the court in its order for dismissal other-

wise specifies, a dismissal under this subdivision and

any dismissal not provided for in this Rule, other than

a dismissal for lack of jurisdiction or for improper

venue, operates as an adjudication upon the merits.’

Consequently under the majority rule a dismissal pursuant

to a Rule 12(b)(6) motion falls within the contemplation

of the plain meaning of Rule 41(b).

Courts which follow the majority view hold that a final

judgment can be rendered on the pleadings alone. Olsen

v. Muskegon Piston Ring Co., 117 F.2d 163 (6th Cir, 1941).

For example, one court holding the majority view has

stated that in cases where a motion to dismiss a complaint

is sustained and the complaint is dismissed, and where the

plaintiff does not desire to amend, he should announce his

election to stand on his pleading, let a final order or judg-

ment be entered dismissing the action, and then appeal

from that order or judgment. Crutcher v. Joyce, 134 F.2d _—

809 (10th Cir. 1943). The rule of finality also applies when

leave to amend the complaint is granted but not acted upon

— % BOR RE DLE SI YO OTN YN RS IRAE ERE REIS OBIE, SPRL EAR gai

RIOR ERE PIE OTIS 28

34a

as well as when leave is not granted. Matthews v. Wolvin,

266 F.2d 722 (5th Cir. 1959). In the case of Fyfe v. Pan-

Atlantic S.S. Corp., 114 F.2d 72 (2nd Cir. 1940), the Court

capsulized the majority view in stating that ‘‘[u]nder

modern principles, failure to amend upon dismissal of a

complaint under circumstances where amendment was per-

missible should bar the institution of a second suit.’’

To the contrary, however, a significant, though shrink-

ing, number of jurisdictions follow the minority view which

permits a second suit despite defective pleading in the

original action. The policy underlying this position argues

that dismissal] for failure to state claim never reaches the

merits of a claim and, therefore, ought not to operate as

res judicata because a litigant deserves to have his case

decided on the merits.

For instance, in the case of Rost v. Kroke, 195 Minn. 219,

262 N.W. 450 (1935) judgment was entered and the com-

plaint dismissed pursuant to an order sustaining a de-

murrer to the complaint for failure to state a cause of

action. The complaint had alleged in the alternative facts

constituting a good cause of action and facts which did not.

The court held that the dismissal was not a bar to a sub-

sequent suit in which the defective pleading was corrected

by stating a good cause of action. Moreover, after a deci-

sion by a state court dismissing a complaint for failure to

state a cause of action because it invoked the doctrine of

res ipsa loquitur which was adjudged inapplicable, one

federal court operating under the Federal Rules held that

the dismissal was not res judicata as to plaintiff’s right to

maintain an action in federal court on the same cause of

action. Bruening v. El Dorado Refining Co., 53 F.Supp.

356 (W.D. Mo. 1943).

The minority view makes one concession to the majority

view in that it recognizes that if, in a prior action, leave

to amend is expressly granted and the privilege is specifi-

cally refused, then the prior action does become res judi-

—

35a

cata. Hacker v. Beck, 325 Mass. 594, 91 N.E.2d 832 (1950).

In the case at bar, however, leave to amend was not sought

and was not granted.

Having pondered at length both majority and minority

viewpoints, this Court is of the opinion that the majority

view, which maintains that prior dismissal under Rule

12(b) (6) is a final judgment unless the court specifically

dismisses without prejudice, is the better view and should

be adpoted in this State; however, the Court further holds

that it is only equitable to give our conclusion in this

regard exclusively prospective application due to the extra-

ordinary confusion in both this State and other jurisdic-

tions with regard to the issue. The law of West Virginia

was so unclear as to put the parties in the case at bar to

playing a needless ‘‘game of forfeits,’’ and furthermore,

there was no conclusive guidance on the matter available

from foreign jurisdictions, state or federal. In addition,

the trial judge clearly intended to dismiss only the

complaint and not the entire action.

This Court’s policy with regard to procedural irregulari-

ties which needlessly interfere with a disposition on the

merits was succinctly stated in the recent case of Rosier

v. Garron, W.Va. , 199 S.B.2d 50 (1973), where the

Court said:

**. . . [T]he distinction between procedural rules

and substantive rights is frequently illusory. How-

ever, to the extent possible, under modern concepts

of jurisprudence, legal contests should be devoid of

those sporting characteristics which gave law the

quality of a game of forfeits or trial by ambush.”’

This case raises, once again, the age-old conflict between

society’s need for predictability accomplished through

legal formalism versus society’s need to do justice in in-

dividual cases. Formality and order are values essential

to the stability of any legal system, yet, as was articulated

in detail in Rosier, supra, man’s fundamental sense of

—

FLEE AE IR PRL RE EY RE RAINS ono ge Sp eae

36a

justice constantly clashes with formalism when procedural

impediments undesignedly lead to an unreasonable result.

Results become logically insupportable when they are

based upon a law which is unintelligible.

The Court holds, therefore, that the future law in this

State with regard to dismissals under Rule 12(b) is that a

judgment dismissing an action under Rule 12(b)(6) for

failure to state a claim upon which relief can be granted,

and without reservation of any issue, shall be presumed

to be on the merits, unless the contrary appears in the

order, and the judgment shall have the same effect of res

judicata as though rendered after trial in a subsequent

action on the same claim. 1B Moore’s Federal Practice,

(2nd Ed. 1974), § 0.409. We further hold that a judgment

on the merits shall not require a determination of the con-

troversy after a trial or hearing on controverted facts.

It shall be sufficient that the record show that the parties

might have had their controversies determined according

to their respective rights if they had presented all their

evidence and the court had applied the law, Olsen v.

Muskegon Piston Ring Co., supra.

The last of defendant’s assignments with which this

Court will deal are the alleged errors in the trial court’s

refusal to give defendant’s instruction No. 14 and No. 7.

Instruction 14 said:

‘“‘The court instructs the jury that the publications

complained of by plaintiff were published on October

24 and 25 of 1968 and that the question of libel,

falsity and actual malice must be determined as of the

time the various publications were published.”’

Obviously a newspaper under the First Amendment cannot

be held to a standard of omniscience and can be judged

with regard only to information which is available to the

newspaper at the time of publication. Therefore, the Court

37a

holds that it was error for the trial court to fail to give

instruction No. 14 but that the error was harmless in light

; of all of the other instructions which were given in the

| ease.

; It is clear from a reading of plaintiff’s instructions Nos.

3 1, 2a, 3, 7, and defendant’s instructions Nos. 3 and 5 that

4 the case was tried on the proper theory that a newspaper

4 is to be judged concerning actual malice with regard only

4 to information known by it at the time of publication. '”

q * PLAINTIFF’s INSTRUCTION No. 1

The Court instructs the jury that if you find by a preponderance

of the evidence that one or more of the publications identified as

Plaintiff's Exhibit’s Nos. 1 & 2 complained of constituted **libel’’,

as that term is defined for you in these instructions, and if you

further find by a preponderance of the evidence that the libelous

publication or publications were false in some material particular;

and if you. further find by clear and convineing evidence that the

libelous and false statements were published with actual malice, as

defined in these instructions, then your verdict may be for the

plaintiff, James M. Sprouse, and against the Charleston Mail

Association.

PLAINTIFF’s INSTRUCTION No. 2a

The Court instructs the jury that libel in a ease brought by a

nominee for public office may be defined as a false writing pub-

lished by the publisher with knowledge of its falsity, or false

publication published with reckless disregard of its falsity and

which tends to injure the reputation of the nominee, to throw eon-

aS RRS TOD AE NI aa PSTN lr ONE ncaa ee a Sh eh atee NY

; tumely or to reflect shame and disgrace upon him, or to hold him

; up as an object of scorn, ridicule, or contempt.

i PLAINTIFF’s INsTRUCTION No. 3

: The Court instructs the jury that the term “actual malice”

3 means that the defendant published false and defamatory state-

ments with knowledge that they were false or with a_ reckless

disregard of whether they were true or false.

PLAINTIFF’s INSTRUCTION No. 7

The Court instructs the jury that even though failure to investi-

gate, on the one hand, and mere ill will, bias spite or prejudice on

the other, standing alone, are insufficient to establish either a

- saree OPEL ERNE A fle Nis ALERT HAG

OEP IOS DESAI PEED SONS ~ oe VERT

In general, where it appears to this Court that the effect of

an improperly refused instruction is merely cumulative,

38a

knowledge of the falsity of, or a reckless disregard of the truth

or falsity of the materials used; however, such evidence, if any, of

motive, intent, may be considered for the purpose of establishing,

by cumulation and by appropriate inferences, the fact of a defend-

ant’s recklessness or of his knowledge of falsity. Goldwater v.

Ginzburg, 414 F.2d 324, 342.

DEFENDANT’s INSTRUCTION No. 3

The Court further instructs the jury that all of the news

stories and editorials published by the defendant, and complained

of by the plaintiff, were constitutionally protected and require a

verdict for defendant, unless:

First, one or more of the publications complained of constituted

‘*libel’’ as that term is defined for you in these instructions;

Second, the libelous publication or publications were false in

some material particular; and

Third, the libelous and false statements were published with

‘‘actual malice’’ as defined in these instructions;

The burden is upon the plaintiff to prove the first two of these

essential elements by a ‘‘ preponderance of the evidence’’ as that

phrase is defined in these instructions;

The burden of proof to be borne by plaintiff with respect to

the third essential element—actual malice—is more strict. The

plaintiff has the burden of proving actual malice by ‘‘clear and

convincing evidence’’.

The Court instructs the jury that by clear and convincing evi-

dence is meant more than a mere preponderance of evidence.

Clear and convincing evidence is that evidence which is so clear,

explicit, and unequivical [sic] as to leave no substantial doubt and

which is sufficiently strong to command the unhesitating assent of

every reasonable mind.

If you find that plaintiff has failed to establish any of these

three essential elements by the standard explained, it is your duty

to return a verdict for defendant.

DEFENDANT’sS INSTRUCTION No. 5

The Court instructs the jury that the term ‘‘actual malice,’’

which must be established by clear and convincing evidence to war-

rant a verdict for plaintiff, means that defendant published false

and defamatory statements with knowledge that they were false

39a

and that the theory of the case enunciated in the refused

instruction has been adequately covered by other instruc-

tions, and where it further conclusively appears that the

outcome of the case would not have been affected by the

giving of the refused instruction, this Court will not re-

verse for failure to give that instruction alone. Jackson

v. Cockill, 149 W.Va. 78, 138 S.F.2d 710 (1964) ; Morgan v.

Price, 151 W.Va. 158, 150 S.E.2d 897 (1966). The de-

fendant is entitled to a fair trial; it is not entitled to a

perfect trial because such a thing does not exist.

The defendant further argues that it was error to refuse

defendant’s instruction No. 7 which said:

‘*The Court instructs the jury that in considering the

news stories complained of which quote or attribute

Statements to Arch A. Moore, Jr., the Republican

nominee for Governor, there was no legal duty on the

part of defendant to subject Moore’s statements to any

test of truth; and that accordingly, since plaintiff has

presented no evidence from which you could find that

Moore’s statements were not accurately and fairly

reported, you may not return a verdict for plaintiff

against defendant based on statements of Moore pub-

lished by defendant, even though you may believe from

the evidence that Moore’s statements were libelous and

false and that he was aware of the falsity or acted

r a reckless disregard of whether they were true or

alse.

The Court holds that defendant’s instruction No. 7 is not

an accurate statement of the law as applied to the facts

of this case. Although in general a newspaper is not

liable for publishing in good faith statements of political

or with a reckless disregard of whether they were true or false.

Reckless disregard for the truth cannot be equated with negligence

or what a reasonable man would have said under the circumstances,

Reckless disregard for truth or falsity implies a high degree

of awareness of probable falsity. There must be clear and con-

vineing evidence permitting the conclusion that the defendant in

fact entertained serious doubts as to the truth of his false and

defamatory publication.

_ —

EE EE Ee

40a

candidates during an election campaign, the evidence in

this case demonstrates that the statements of Arch A.

Moore, Jr. were closely coordinated with the story gen-

erated by the defendant as part of an overall plan or

scheme, the purpose of which was to discredit plaintiff.

Although the defendant would not have been liable for

publication of the Moore statement if defendant were

unaware at the time of publication of the falsity of the

statement, the evidence in this case reasonably implies that

at the time of publication the Daily Mail knew that the

accusations made by Moore were false. Accordingly, in

order for defendant’s instruction No. 7 to have been given,

it would have been necessary for defendant to qualify it

by admitting that the defendant would be liable for the

Mocre statements if the jury concluded that defendant

published them with actual knowledge of their falsity or

with willful and reckless disregard for their truth. See,

generally: Greenbelt Cooperative Publishing Association,

Inc. v. Bresler, 398 U.S. 6 (1970). As the defendant did

not offer to amend the instruction to conform to the law,

the instruction was properly refused.

Therefore, for the reasons set forth in this opinion, the

judgment of the Circuit Court of Fayette County is re-

versed in part and affirmed in part, and the case is remanded

to the Cireuit Court with instructions to strike as a matter

of Federal Constitutional law the jury award of punitive

damages and to enter judgment on the jury verdict for

$250,000 actual damages plus interest from date of judg-

ment and costs.

Mr. Justice Haden and Mr. Justice Sprouse, deeming

themselves disqualified, did not participate in the consid-

eration or decision of this case.

Mr. Justice Haden and Mr. Justice Sprouse, deeming

themselves disqualified, did not participate in the con-

sideration or decision of this case.

Reversed in part, affirmed in part,

remanded with instructions.

4la

Appendix to Opinion of Neely, J.

Charleston Daily Mail

Charleston, West Virginia

Thursday Evening October 24, 1968

[Directly beneath the newspaper title and the date line

appeared the following headline in normal size headline

type extending across the entire eight columns of the front

page :]

Seneca Rocks Tourist Prosecr Property Enricuina

CANDIDATE SPROUSE

[Directly beneath this headline and also extending across

the entire eight columns of print appeared a picture of the

land allegedly purchased by Sprouse and his corporation.

The caption beneath the photograph read :]

A New York corporation headed by Democratie guber-

natorial candidate James M. Sprouse owns the land

above, which is adjacent to a national recreation area

in eastern Wesi Virginia where the federal government

has plans to develop a $30 million tourist attraction.

The corporation already has made a handsome profit

on its original investment, and retained the choice land

in Pendleton County, like that shown in this photo-

graph. The corporation was formed a month before

the U.S. Forest Service completed its plans for the

recreation area, and before the plan was approved by

Congress. Much of the corporation’s profits, to date,

eventually will come from the U.S. Treasury.—Daily

Mail Photo by Chester Hawes.

[Beneath the photograph and caption appeared the follow-

ing headline in oversize type extending across five col-

umns :]

PENDLETON REALTY BONANZA

BY JIM SPROUSE DISCLOSED

[The following sub-headline appeared next in normal size

headline type printed across the two columns in which ap-

peared the article :]

CLEANUP oF NEARLY

$500,000 in View

By Bob Mellace

Daily Mail Political Editor

_ —_— aoe lees FLL SPE ALLL LIL LALLY AL ILE ENE I SS AEE LEON ESE DIME SELIG

42a

A. corporation formed in New York and headed by Demo-

cratic gubernatorial candidate James M. Sprouse stands to

make a very handsome profit dealing in property adjacent

to a $30 million federal recreation and tourism project in

eastern West Virginia, the Daily Mail has learned.

The corporation already has made a profit of $48,176—

most of which will come eventually from the U.S. Treasury

—on an original investment of $134,620. And the valuation

of its remaining holdings runs as high as $400,000, accord-

ing to information obtained by this newspaper.

There is evidence the firm has violated state law by buy-

ing and selling property before it was qualified, as a foreign

corporation, to do business in West Virginia. There is addi-

tional evidence it has never done any business in New York

where it was chartered, and where the law permits incorpo-

ration by an agent without identifying the incorporators,

which is forbidden by West Virginia law.

The corporation is ‘Selmet Properties, Inc.,’ and the only

persons involved in it, from the records and information

given the Daily Mail by the U.S. Forest Service, are

Sprouse, Elkins real estate dealer and Democratic political

figure, Robert Hedrick, Pendleton County motel operator

and Sprouse supporter Wilson Smith, and a New York

lawyer.

All of the property involved is in Pendleton County. It

is adjacent to or very near two of the state’s greatest

natural attractions—Spruce Knob and Seneca Rocks.

$30 Million Outlay

E. M. Olliver, supervisor of the Forest Service in Elkins,

said the federal government has plans to develop the entire

area for recreation and tourism at a total estimated cost of

$30 million, and work on it already is under way.

43a

The development plan was completed in March, 1965 for

presentation to Congress, after months of work on it by the

Forest Service.

One month earlier, on Feb. 25, 1965, Selmet Properties

was incorporated in New York by Jerome L. Grometstein,

a New York Attorney who certified the office of the corpo-

ration was to be located in the city of New York.

A bill authorizing the project was introduced in Congress

in April and passed in September, 1965.

On March 12, 1966, Selmet bought approximately 2,900

acres from Henry Regnery and his (See SPROUSKE, pg.

11, Col. 1)

[At the top of Page 11 above the continuation of the story

the following headline appeared in normal size headline

type and extending across six columns:]

Sprouse Owns Choice Land Beside $30 Million U.S. Resort

{Beneath the headline and also covering six columns ap-

peared a reproduction of a map showing the general area

where the land was located, beneath which appeared the

following caption :]

This is a map of the area where the federal government

has plans to spend $30 million developing one of the major

tourist attractions of the Eastern United States. A New

York corporation headed by Democratic gubernatorial

nominee James M. Sprouse owns some choice land in the

area as shown by the heavy arrow between the community

of Riverton and the road leading to Spruce Knob, the high-

est point in West Virginia. The knob and Seneca Rocks, a

few miles from the corporation holdings, will be the chief

attractions, but others are shown in this map prepared by

the U.S. Forest Service, which will operate the recreation

area in the Monongahela National Forest.

44a

[Beneath the map and caption appeared the following two-

column headline in oversize type :]

SPROUSE PENDLETON

BONANZA DISCLOSED

{Thereafter appeared the continuation of the story from

the front page as follows:]

wife for $134,620 and paid cash for it according to the deed

on record in the Pendleton County courthouse.

Between May 6 and June 7, 1966, Selmet conveyed seven

parcels to various individuals for $67,932.75, with all of the

deeds signed by Sprouse as president of the corporation.

Much of the property was sold for $1,000 an acre in the

bottomland of the North Fork of the South Branch of the

Potomac River and U.S. Route 33, a main traffic artery

between the two great natural attractions.

More than two months after it started selling property,

Selmet registered in the office of the West Virginia secre-

tary of state, required of foreign corporations before they

can own property or do business in West Virginia accord-

ing to the law.

Sprouse signed as president and Hedrick as secretary-

treasurer, and stated Selmet owned 1,600 acres of land

worth $75,000 as of Aug. 25, 1966.

OFFICE IN CHARLESTON

Whereas the New York charter application showed the

principal office of the firm as being in New York City, the

West Virginia document shows the principal office as 700

Terminal Building, Charleston, where Sprouse has his law

firm.

Three months after qualifying to do business here, Selmet

sold a tract for $28,000 in a deed dated Nov. 26 and signed

by Sprouse as president of Selmet.

That brought Selmet’s take to $95,932 and was the last

deed signed by Sprouse as president. All other deeds from

45a

that day to the present have been signed by Hedrick as

president.

In January, 1967, Olliver said the Forest Service was

approached by Smith, offering to sell a tract of 1,385 acres,

and the service recommended in May that it be purchased.

Because the Forest Service did not have the money for

the purchase at that time, Olliver said his office approached

Nature Conservancy, Inc., of Washington to buy the tract

and hold it for the service. Nature Conservancy is a non-

profit corporation of dedicated conservationists who buy

land for public agencies and hold it until the agency in-

volved is prepared to buy it.

Selmet sold the acreage to Nature Conservancy on Oct.

2, 1968 for $81,364. That made Selmet’s total gross income

$182,796.75 more than it paid the Regnerys for its entire

holdings.

Olliver said the only person he ever talked to about the

deal was Smith, that he never knew who owned Selmet, and

that he couldn’t find out because at the time he inquired the

firm was not incorporated in West Virginia.

There is no precise way to measure how much land Selmet

has left out of the original Regnery tract because of the in-

accuracy of deeds in the mountainous territory.

However, by deducting all of the land sold by Selmet, and

using the Pendleton County land books as a guide, you come

up with a total remaining of 404 acres.

Much of this appears to be in the bottomland and in-

cludes very flat property on the highway that will be at-

tractive to developers of motels, service stations, ete., when

the Forest Service completes the great tourist complex.

The Selmet property lies a few miles south of Mouth of

Seneca, where the great rocks come in full view of the

tourists. It is between Riverton and Secondary 13, a hard-

ee PETRIE) LORETO FAIS

46a

base road that now leads up to Spruce Knob, the highest

point in West Virginia, 4,862 feet.

All of the area lies within the Monongahela National

Forest where a 100,000-acre tract has been designated as

the Spruce Knob-Seneca Rocks National Recreation Ara

[sic].

Charleston Daily Mail

Charleston, West Virginia

Friday Evening October 25, 1968

[At the top of the front page of this day’s edition appeared

the following headline in oversize headline type across

columns one through four:]

MOORE ASKS FEDERAL

PROBE INTO SPROUSE’S

PENDLETON LAND GRAB

[Directly beneath the following sub-headline which was

printed in normal size headline type covering two columns

appeared this news story:]

‘Dummy Firm’ Seen

Proving Corruption

By Bos MELiace

Daily Mail Political Editor

Congressman Arch A. Moore Jr. today asked for a full

congressional investigation of the land dealings near a $30

million federal recreation project by a New York corpo-

ration headed by his Democratic opponent for governor,

James M. Sprouse.

[‘*‘]F rom what I have read in the newspaper and from in-

formation that has since come to me privately, it would

appear that this land grab smacks of the same old State-

house corruption,[’’] Moore said. [ Note by Petitioner : Quo-

tation marks erroneously omitted by court below.]

Yesterday’s Daily Mail carried a story about Selmet

Properties, Inc., which already has made a handsome profit

47a

in Pendleton County near the new Spruce Kneob-Seneca

Rocks National Recreation Area, and stands to make much

more.

The corporation, according to New York state records,

was formed in February, 1965 a month before plans for the

federal project were announced by the U.S. Forest Service.

Moore said:

‘‘Here we have a dummy corporation, set up in the dark

of night in the state [sic] of New York, which claims its

assets consist solely of real estate in the State of West Vir-

ginia. This seems more than vaguely reminiscent of the

Florida corporation scandals of a few months ago.

‘‘T see no reason for the formation of such a corporation

in the State of New York, unless you wish to conceal certain

facts of the internal workings of the corporation, or to

avoid disclosures as to the ownership of the corporation

... It is obvious there were other compelling reasons for

these West Virginians to go outside the state for the for-

mation of their company. I would like to know what they

wished to hide. I think also that these questions should be

answered:

‘*1. Who were the members of the corporation in addi-

tion to James M. Sprouse, Robert Hedrick and Wilson

Smith?

‘*2. Did they have prior knowledge of the Forest Serv-

ice recommendation that this area of land would be utilized

as a portion of the federal recreation complex planned

there?

‘*3. Where did the money for the purchase of this land

come from?

‘*4. Were any individuals in (Se [sic] Sprovse’s pg. 6,

Col. 1)

=... PWS: SRA ee

48a

[The story is continued on Page 6 under the one-word, one-

column headline ‘‘Sprouse’s :]

(Continued from Page One)

the federal government involved?

‘5. Who was responsible for changing the boundaries

of the recreation complex to include land owned by this

corporation?

‘*6. Have any members of this corporation been in-

volved in similar land sales to the federal government or

its agents in this same area?

‘*7, Why was one tract of land, not contigous and not

needed for this recreational [sic] facility, included in the

sale?

**T believe that these questions should be answered in

full. To this end, this day I am asking fc~ a full investiga-

tion of this entire matter by the appropriate committee of

the House of Representatives.’’

Sprouse has made no comment on the Daily Mai! story

of Thursday but called a news conference for 3 p.m. today,

reportedly to discuss the story.

Hedrick was identified as an Elkins real estate dealer,

active in Democratic party affairs, and a director of the

U.S. Farmers Home Administration. Smith is a Pendle-

ton County motel operator, also a Democrat and active in

Sprouse’s campaign.

Selmet Properties, according to the Daily Mail’s infor-

mation, did not sell land directly to the federal government.

Director E. M. Olliver of the Forest Service explained

that, in cases where the service wants land and does not

have money at hand to purchase it, there is a non-profit

49a

corporation of conservationists, Nature Conservancy, Inc.,

of Washington, D.C., that buys the land and holds it.

At the service’s direction, Nature Conservancy bought a

1,385-acre tract from Selmet for $81,364. Olliver said the

service now is in process of buying it from Nature Con-

servancy, at cost plus expenses.

The Nature Conservancy sale put Selmet’s gross profits

up to $48,176 on its original cash investment of $134,620,

according to deeds on record in the Pendleton County

courthouse. In addition, the corporation has much valu-

able land left on the main highway through the big recrea-

tion complex.

[A second article appeared on Page 1 of the Daily Mail,

placed directly adjacent to the above article. At the top

of the page spanning columns five through eight appeared

the following headline in normal size headline type:]

Where Governor Candidate ‘Cleans Up’

[Below the headline appeared a photograph of the Seneca

Rocks area which also spanned four columns. Beneath the

photograph appeared the following caption:]

Seneca Rocks, above, are one of West Virginia’s most

scenic attractions but the U.S. government says they are

below, who says the rocks have been in his family more

than 200 years. The government wants them for a new

recreation area in Pendelton County and Harper says he

will fight the condemnation action at the price offered. Mean-

while, down the road from the rocks, the government will

pay $81,364 for property owned by a corporation headed

by Democratic gubernatorial candidate James M. Sprouse,

without a condemnation fight, and will take more property

than it actually needs.——Daily Mail Photos by Chester

Hawes.

50a

[Beneath the above quoted caption appeared the following

headline spanning four columns :]

Fortune To Jim SPROUSE

BUT PITTANCE FOR SENECA

Landmark’s Owners Plan

Court Fight Against Deal

[Under the headline and beside the story was a photograph

of D. C. Harper extending across two columns under which

was printed the caption :]

D. C. Harper... . Will Fight Rocks Project

[Beside the picture of Harper and beneath the headline

appeared the following story :]

By Bos ME.LLAce

Daily Mail Political Editor

The owners of Seneca Rocks, one of the greatest natural

attractions in the Eastern United States, say the federal

government has offered them $7,900 for their property. And

they will fight it in a condemnation court.

But the same federal government will pay, indirectly,

more than $81,364 to a New York corporation headed by

Democratic gubernatorial nominee James M. Sprouse for

what is mostly cutover hillside land just a short distance

from the rocks.

And the U.S. Forest Service says it had to make conces-

sions to the corporation to get the land it wants for a new

road to Spruce Knob recreation area. It did not consider it

necessary to condemn this land.

The service is developing a new recreation complex on

100,000 acres of the Monongahela National Forest and

Seneca Rocks and Spruce Knob are the key attractions. It

is estimated to cost $30 million.

5la

Sprouse called a press conference at 3 p.m. today, re-

portedly to comment on yesterday’s Daily Mail story aboat

the New York corporation.

D. C. Harper lives at the Mouth of Seneca and says the

rocks have been in his family more than 200 years. They

are on a 73-acre tract. But, says Harper, that tract includes

flat land fronting 1,100 fect on the main highway, U.S. 33—

State Route 28, and land on that highway in the vicinity of

the new development is selling for $1,000 an acre and more.

In Names or Hers

The rocks are now in the names of his two children and

their children, according to Harper, who says they will

fight the condemnation proceedings.

He adds that appraisals of the rocks have run from

$9,000 to $40,000, and that he once ref used to give an option

on them for $150,000.

They are a great tourist attraction and a magnet for col-

lege students from all over the cast who come to Mouth of

Seneca every holiday to climb the rocks. The benefits to

the owners are incidental to the operation of a general store

opposite the rocks.

South of the rocks on U.S. 33 a few miles is the 2,900-

acre tract purchased by Selmet Properties, Inc., for $134,-

620 in March 1966. In August of the same year, Sprouse

signed as president when the corporation qualified to do

business in West Virginia.

Selmet was chartered in New York in February, 1965,

one month before the Forest Service disclosed its plans

for new recreation area. According to the records, it has

done no business in New York, only in Pendleton County,

West Virginia.

As of this month, Selmet had a gross profit of $48,176

from sales of some parcels from the original tract, but re-

——_——e GOI NE OT hE IO OLE CLERGY tile URIS RD, ot

52a

tains much valuable bottomland fronting on the highway

and variously esti- (See Lanpmark, Pg. 6, Col. 4)

(On Page 6 appeared the following headline above the con-

tinuation of the story:]

continued

Landmark Owners

Offered ‘ Pittance’

mated at 400 acres worth $1,000 an acre.

A deed recorded May 7, 1966, and signed by Sprouse as

President of Selment [sic] shows William Painter and

others paid $12,000 to the corporation for 12 acres on the

uphill side of the highway. It is an ideal location for a

store and service station because it is at the intersection of

the main highway and a rockbase road running up the

mountain to Spruce Knob.

But, when the recreation complex is completed, that road

won’t be the main entrance to the new recreation area. A

new road will be constructed on what once was Selmet prop-

erty, and which will be flanked by Selmet property when it

is in service.

Oup Route UNsurraBLe

The new road is what brought Selmet into the picture,

according to E. M. Olliver, supervisor of the Forest Service

at Elkins.

He told the Daily Mail that an engineering survey showed

the present road to Spruce Knob, where Painter bought his

property from Selmet, would not be suitable for traffic when

the new complex is completed.

If it is any consolation to Painter, Olliver also said that

improvements of the old road to the standards sought by

the service would have required the taking of his property

anyway.

nia . PR IY SARI AEE LOR IES GG ORIN EI a Wh ms

53a

However, Olliver continued, the survey showed the best

location of a road to the Knob is a short distance north of

the Painter property, on Blizzard Run. The Blizzard Run

property provides the necessary width, alignment and grade

needed for the new road, Olliver said, and added, ‘‘that’s

when we went to Selmet.”’

He did not know who Selmet was, he said, because the

corporation was not registered at the secretary of state’s

office in Charleston. But Wilson Smith, a motel operator

and Sprouse supporter in the current political campaign,

came to the Forest Service in January, 1967, and offered

the 1,385 acre tract.

The property, according to Olliver, includes the site of

the new road, on the western side of the highway, some

bottomland, and another tract on the eastern side of the

highway, above the bottomland and far from the forest

boundaries.

The Forest Service did not want all of that land, Olliver

said, but Selmet refused to sell what the service wanted

unless it took it all.

Why didn’t the Forest Service condemn what it wanted,

without taking the land on the opposite side of the high-

way?

‘We didn’t have to condemn,’’ Olliver replied ‘because

it was a case of willing seller and willing buyer.’’

But Olliver and his property manager also disclosed

that the Selmet property it did want, for the road, was not

in the forest boundaries, which had to be extended to cover

that property before it could be purchased.

The property on the other side of the highway, which it

also had to buy, is not in the forest boundary. Its purchase

Was justified by Olliver, who said it qualifies for government

purchase because it is suitable for national forest purposes.

54a

The U.S. Forest Service did not have the available funds

to buy the Selmet property, Olliver said, so it turned to

Nature Conservancy, Inc., of Washington, D.C. This is a

non-profit organization of conservationists who buy land

wanted by the federal government for parks and other pur-

poses and hold it until the government agency has the

money to buy it back.

The Forest Service is now in the process of getting the

land from Nature Conservancy, Olliver said, and will pay

what the Nature Conservancy paid to Selmet, plus any

expenses Nature Conservancy incurred in the purchase.

Selmet conveyed the 1,385 acres to Nature Conservancy

Oct. 7, 1968, for $81,364. Robert Hedrick of Elkins signed

as president of Selmet. with Smith as vice president,

according to the deed on record at the courthouse in Frank-

lin.

ANI III GE EET ON LO OLON TENET EEA IS i a a ey wy

50a

APPENDIX B

Final Order of the West Virginia Supreme Court

Entered February 4, 1975

State or West Vircrn1a

At a Regular Term of the Supreme Court of Appeals

continued and held at Charleston, Kanawha County, on the

4th day of February, 1975, the following order was made

and entered, to-wit:

James M. Sprouse, Plaintiff Below, Appellee

13463 v.

CLay Communication, Inc., a corporation,

Defendant Below, Appellant

Upon an appeal from and supersedeas to a judgment of

the Cireuit Court of Fayette County rendered on the 21st

day of December, 1973, overruling motion to set aside the

verdict of the jury and the judgment entered on the 9th

day of August, 1973.

The Court having maturely considered the transcript of

the record herein, the argument and briefs of coursel there-

on, and the briefs Amicus Curiae of American Newspaper

Publishers Association, by Gilbert S. Bachmann, and Arthur

B. Hanson and W. Frank Stickle, Jr., its attorneys; West

Virginia Trial Lawyers, by Stanley E. Preiser and Robert

T. Goldenberg, its attorneys, is of opinion for reasons stated

in writing and filed with the record that there is error in

said judgment, but not such as to require reversal of the

entire judgment. It is therefore considered and ordered

that the judgment of the Circuit Court of Fayette County

rendered on the 21st day of December, 1973, overruling

motion to set aside the verdict of the jury and the judgment

entered on the 9th day of August, 1973, is affirmed insofar

as it refused to set aside the jury verdict in favor of the

plaintiff in the amount of $250,000.00, general damages, plus

6% interest and costs, but insofar as it refused to set aside

a (POW LE SS AS TES ee aH

56a

the jury verdict for the additional amount of $500,000.00,

punitive damages, the same is hereby reversed, set aside

and annulled. And this action is remanded to the Circuit

Court of Fayette County with directions to enter judgment

upon the jury verdict for $250,000.00 aforesaid, plus inter-

est from date of judgment, and costs, according to the prin-

ciples stated in the written opinion aforesaid and further

according to law; all of which is ordered to be certified to

the Cireuit Court of Fayette County.

The syllabus of points adjudicated, prefixed to the writ-

ten opinion prepared by Justice Neely, was concurred in by

Justices Berry and Caplan. Justices Haden and Sprouse,

deeming themselves disqualified, did not participate in the

consideration or decision of this case.

A True Copy

/s/ Grorce W. Sincieton

Clerk Supreme Court

of Appeals

57a

APPENDIX C

Order of the Circuit Court of F ayette County, West Virginia

Filed December 21, 1973, Together with a Memorandum

Opinion of Said Court Dated December 7, 1973

IN THE CIRCUIT COURT OF FAYETTE COUNTY, WEST VIRGINIA

Civil Action No, C-4885

James M, Sprouse, Plaintiff,

Cray Communications, Inc., a corporation, Defendant.

Order

This day came the parties by counsel relaiive to the mo-

tion heretofore made by the defendant to set aside the

verdict of the jury and the judgment entered thereon, and

to have judgment entered for the defendant, or in the al-

ternative to set aside the verdict of the jury and the

judgment entered thereon, and to award the defendant a

new trial, for the reasons assigned in said motion.

The Court, having maturely considered the briefs and

argument of counsel contained therein, is of the opinion to

deny and overrule said motion.

It is therefore Orperep that said motion be overruled in

accordance with the memorandum of opinion dated. De-

cember 7, 1973, which is hereby Orperen filed as part of the

record herein, to all of which action the defendant objects

and excepts.

Wuerevpon, the Court did hear the motion of the de-

fendant to stay the issuance of any execution upon the

judgment and any other proceedings for its enforcement

for a reasonable time as would enable the defendant to

present to the West Virginia Supreme Court of Appeals a

petition for appeal, writ of error or supersedeas from the

58a

judgment; and it is therefore accordingly Orprrep that

execution upon such judgment and any other proceedings

for its enforcement be stayed for a period of ninety (90)

days from the entry of this order and thereafter as the

court may determine upon motion and notice, conditioned

upon defendant’s delivery to the clerk of this Court a bond

in the amount of Ten thousand Dollars ($10,000.00) for

the payment of all damages as any person may sustain by

reason of such suspension in case supersedeas to such judg-

ment not be allowed upon appeal.

ENTER:

/s/ Cuarutes L. Garvin Jr.

Charles L. Garvin, J—r.

Judge

APPROVED Aas TO Form:

/s/ Rupoie# L. DiTRarano

Counsel for Plaintiff

/s/ F. Paut CHAMBERS

Counsel for Defendant

PRESENTED By:

/s/ W. Rosert Aspottr

FOLGE IES ICE gO 9 BEE

59a

TWELFTH JUDICIAL CIRCUIT OF WEST VIRGINIA

FAYETTE COUNTY

CHARLES L. GARVIN, JR., JUDGE

FAYETTEVILLE, WEST VIRGINIA

December 7, 1973

Rudolph DiTrapano, Esquire

Attorney at Law

604 Virginia Street, East

Charleston, West Virginia

W. Robert Abbott, Esquire

Attorney at Law

Fayetteville, West Virginia

Fred A. Jesser, III, Esquire

Attorney at Law

Fayetteville, West Virginia

F’, Paul Chambers, Esquire

Attorney at Law

1601 Kanawha Valley Building

Charleston, West Virginia

Robert K. Kelly, Esquire

Attorney at Law

1601 Kanawha Valley Building

Charleston, West Virginia

Charles O. Gage, Esquire

Attorney at Law

1601 Kanawha Valley Building

Charleston, West Virginia

T. E. Myles, Esquire

Attorney at Law

Fayetteville, West Virginia

Re: James M. Sprouse

Vs. C-4085

Clay Communications, Inc.

A West Virginia Corporation

60a

Gentlemen:

The defendant has filed its motion to set aside the verdict

of the jury and the judgment entered thereon, and to have

judgment entered for the defendant, or in the alternative

to set aside the verdict of the jury and the judgment en-

tered thereon and to award the defendant a new trial.

The Court is of the opinion that such motion should be

overruled.

The record in this case speaks for itself, and references

should be made to it for correction of the very few in-

stances in which the arguments of counsel as set forth in

their various briefs are somewhat imprecise.

I believe that the points are saved in each instance upon

any adverse ruling by the Court.

Counsel for the defendant furnished the Court with what

I consider to be a very good and thorough trial brief. I

studied it throughout and referred to it several times dur-

ing the trial and appreciate it. I believe the rulings of the

Court reflect some of the matters of law set forth in this

brief and as interpreted by defense counsel. Excellent

briefs were filed by the lawyers representing the parties

during and after the arguments on the motion the Court

is now asked to determine. The points seem to be many,

and are so well briefed on each side that I have difficulty

believing that the Court’s discussion here of these many

points would be particularly beneficial to anyone. In many

instances the Court’s comments here would merely belabor

what is already well set out in the briefs of counsel. In

fact the Court has written opinion letters on some of the

points prior to trial.

Perhaps I should comment upon the Court’s ruling that

the defendant’s financial standing could be introduced into

evidence and considered by the jury under plaintiff’s in-

struction 10a in the jury’s consideration of damages. You

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have already called my attention to the recent case of

Spencer vs. Steinbrecher, 152 W. Va. 490. The principles

set out in this recent case are perhaps even more fully set

out in the earlier case, Pendleton vs. Railway Co., 32 W. Va.

270. In addition to the principles set forth in the Spencer

case the Pendleton case holds that ‘‘it is competent to con-

sider the station of the parties, and particularly the finan-

cial... standing of the defendant in order that it may be

determined what will be adequate and sufficient punish-

ment, ete.’’

The Court did refuse certain of the defendant’s instrue-

tions, and without referring to each one separately, it should

be noted that some of these instructions were, in the opinion

of the Court, adequately covered by other instructions

which were given, and the record will show in which in-

stances this ruling is applicable.

I should mention, however, with respect to defendant’s

Instruction No. 15 that this matter was adequately and fully

covered by the Court when it inquired of the members of

the panel upon their voir dire. Counsel was permitted to

argue the content of the instruction before the jury. An

instruction on the point would, in my opinion, detract from

the importance of the answers the panel members gave un-

der oath.

A careful reading of all of the instructions indicates to

me that this jury was adequately and properly instructed

upon the law applicable to this action of libel.

I feel called upon to comment upon defendant’s assigned

point of error 11. Counsel for the defendant stated that the

Court erred in permitting Justice Sprouse to testify that

former Governor Barron supported the republican candi-

date Arch A. Moore, Jr. in the 1968 gubernatorial election.

It should be pointed out that the defendant’s attorney,

Mr. Chambers, asked the line of questions which in the

judgment of the Court opened the door. On page 313 of the

record Mr. Chambers asked the following question:

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62a

Q. ‘‘Did you become a candidate for Governor of West

Virginia with a background of being first during the Barron

years—the years of former Governor Barron’s governor-

ship, President of the Young Democrats of West Virginia;

then being during the administration of Governor Hulett C.

Smith the Democratic State Chairman, a job which you

continued to hold until after the Primary of 1968 ,in which

you were nominated for Governor? When with that back-

ground of political leadership in your Party during a span

of time extending over eight years, would you not normally

expect to be identified with what is generally called the

**Statehouse’’?”’

On page 314 Mr. Chambers asked Justice Sprouse the

following question:

‘*Q. You were publicly endorsed for election by former

Governor Barron during the campaign, were you not?”’

Again on page 314 the following question was asked:

“*Q. Did you repudiate that endorsement?’’

In Chambers the Court asked Justice Sprouse certain

questions which appear in the record on page 392.

It is the Court’s reasoning that the answers given by

Justice Sprouse to Mr. Chambers’ questions and his an-

swers given to the questions of the Court propounded to him

upon the record out of the presence of the jury indicated

that his answers were his conclusions based upon what he

had read, specifically including the letter to the Charleston

Gazette by the former Governor Cecil Underwood. It would

seem considerably unfair to permit him to be questioned

upon his state of mind and his conclusions without permit-

ting his own counsel to question him upon what produced

the state of mind and those conclusions. You will note that

as soon as I remembered that it was Mr. Chambers in fact

who had opened this door, I allowed it to come in.

Out of the order of the assignment of grounds of error

I should like to mention the assigned point of error no. 3.

ee * bata POLL ILE INE SIC LIED VO OOIA TING OBR om

63a

Before the opening statements of counsel were made the

court ruled upon the objection that was made by defendant

to the use of the enlarged placards of the Daily Mail papers

in question. Defendant had distributed among each of the

jurors the copies of the particular newspapers in question

in their actual size. The use of the placards seemed to me at

the time to be a blessing. It seemed to me that it would save

counsel for both sides a great deal of time in the question-

ing of varieus witnesses to be able to point at one of those

placards a few feet away from the jury and promptly and

immediately draw their attention to the part, the headlines,

the sentences, or the paragraph to be covered by the ques-

tion. Otherwise almost every question would have taken a

tremendous amount of time to specifically draw the atten-

tion of each juror to a particular place in the newspaper to

be involved in the question to be asked. There would be

great rustling of papers and numerous delays. It is also a

fact, as is pointed out by counsel for the plaintiff, that if

the jurors had these newspaper articles in their hands held

up in front of their faces to read, then they would see the

articles with exactly the same degree of clarity in which

they viewed the enlarged placards several feet away; the

enlarged placards blocking a lot less of their vision. And

as I said before, counsel could quickly direct the entire

jury’s attention to the particular word, headline, sentence,

or paragraph to be covered by the question.

In my view the placards neither added to nor detracted

from in any way the headlines and words which appeared

in the articles. I noticed many times counsel for the de-

fendant referred and pointed to the placards instead of

using the copies given to the members of the jury.

In rereading the opening statement of plaintiff’s coun-

sel I bore in mind defendant’s assigned point of error no.

4. The record shows that the Court sustained the only

objection made by defense counsel and asked plaintiff’s

lawyer to confine his remarks to an opening statement.

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64a

This was the only objection made. Then following the

opening statement of counsel for the defendant, and after

the noon recess, but before the first witness was called

Mr. Kelly moved the Court to withdraw a juror and de-

clare a mistrial, My opinion is that counsel should have

objected each time to enable the Court to rule upon the

specific matters which defense counsel found objectionable.

By failing to do so I believe that counsel waived any objec-

tions they might have had.

At any rate I do not find anything in the opening state-

ment of Mr. DiTrapano which could be classified as being

so inherently prejudicial as to require the Court now to

set aside a verdict and grant the defendant a new trial.

If counsel for the defendant actually thought that this

opening statement was so prejudicial, then they could have

stopped Mr. DiTrapano right in his tracks by simply

objecting.

With respect to the point of error assigned as no. 15 see

the case of Pendleton v. Railway Company, 82 W. Va., 270,

in syllabus 3, the second line:

“«# * * it is competent to consider the station of the

parties, * * * etc.’’

Perhaps I should add at this point that it appears to me

that counsel for the defendant in the brief filed seeks to

take advantage of grounds which were not assigned as

grounds of objection at the time plaintiff’s instructions

were offered. It is basie thet grounds

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