Ralph W. Ashcroft, Appellant, v. John Hays Hammond, Respondent

Ralph W. Ashcroft, Appellant, v. John Hays Hammond, Respondent. Second Department, April 23, 1909. Libel — privileged communications — burden of proof in cases of qualified privilege — trial — erroneous nonsuit — facts not establishing qualified privilege — publication. In the case of an unprivileged publication libelous per se the law presumes it to be false, and unless the-fiefendant alleges that it is true its faliitv is not in issue, and no evidence on that head is permitted, the only question being-one of damages. If the truth of the publicatjon-he.,pleaded as a_defense_,thfifburden is on the defendant to make it out. But in the case of qualifiedly privileged communications there is no presumption of falsity, but rather one of good faith in the defendant. Hence, if it be pleaded that the publication was qualifiedly privileged and the occasion of such privilege be shown either on the plaintiff’s case or afterwards, the burden is upon the plaintiff to destroy the privilege in order to recover. If the defense of truth be pleaded and proved the defense of qualified privilege is unnecessary; but if the defense of truth be not made out or not pleaded, but merely a defense of privilege, the burden is on the plaintiff to defeat the privilege when the occasion therefor is shown. Hence, although it be assumed that a telegram reflecting on the character of the manager of a corporation, transmitted to a stockholder, was qualifiedly privileged, a nonsuit is error where there is evidence that the statement was false to the defendant’s knowledge or that he did not have probable cause to believe it to be true. Although the sender and the receiver of the telegram both have a pecuniary interest in the corporation as stockholders, they can only send communications to each other in good faith and for the protection of their interests. But where in an action to recover for an alleged libelous telegram sent by one stockholder to another reflecting on the character of a manager of the company, it appears at the close of the plaintiff’s case that a new board of directors favorable to him had been elected by the majority stockholders, and that the defendant with others was instigating the old board of directors to refuse possession to the new board and that the telegram was sent in furtherance thereof, no case of qualified privilege is shown and a nonsuit was error. This, because the law of privilege does not cover unlawful purposes. The sending of a communication by telegram is not a disclosure of it to others so as to destroy the privilege. Appeal by the plaintiff, Ralph W. Ashcroft, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Kings on the 14th day of February, 1908, upon the dismissal of the complaint by direction of the court after a trial at the Kings County Trial Term, and also from an order entered in said clerk’s office on the 31st day of October, 1907, denying the plaintiff’s motion for a new trial made upon the minutes. The action was for damages for libel. The plaintiff and the defendant were stockholders in a business corporation, named The Plasmon Company, of which the plaintiff was also manager. They disagreed as to the affairs and management of the company. At the annual meeting of 1904 a board of directors friendly to the plaintiff was elected. Thereupon the old board of directors and officers refused to go out, but held possession of the company. This was done at the instigation of the defendant. Samuel L. Clemens, a stockholder, sent the defendant the following telegram concerning the trouble: “ Broughton suggests Truslow should act as your attorney and proxy in Plasmon matter. We cannot accept Davis or any one else as permanent manager, but will guarantee to protect your 22% interest on terms stipulated by you. Papers covering Truslow’s appointment mailed you special delivery to-night. Please return them to me at Hotel Wolcott. Please wire Wheeler instructing him to vacate Plasmon offices forthwith; withdraw his policemen, recognize new hoard and release bank account. Also wire Truslow to relinquish deed of trust and other documents on payment of your loan by us. Telegraph reply Hotel Wolcott.” To which the defendant responded by telegram as follows, the Ashcroft named therein being the plaintiff : “I shall strongly oppose turning over company to Ashcroft’s Board of Directors. He has been identified with the rotten administration of Cook and Wright, and is incompetent or worse. Unless Davis accepts management and my stipulation that Ashcroft shall not be employed by the company, I shall retain Wheeler for the present. You have been imposed upon by Ashcroft and others regarding Wheeler. Am going to St. Louis to-morrow to be absent 10 days. On my return, I will discuss matters further with you and others interested. Meanwhile, will extend date of payment my notes.” The complaint is upon this telegram as a libel. The answer consists of certain minor denials, a defense of privilege, and the same matter as a partial defense, i. e., in mitigation of damages. R. A. Mansfield Hobbs, for the appellant. James Byrne [Elihu Root, Jr., with him on the brief], for the respondent. [MAJORITY — Gaynor, J. :] Gaynor, J. : The published matter is libelous per se if not protected by privilege. The non-suit was granted at the close of the plaintiff’s case on the ground that the alleged defamatory communication was privileged. This ruling does not seem to have taken into consideration the law of privilege. In the case_qf an unprivileged publication which is libelou£p¿)6K s^-the law psresumes-it.jo be false, and unless the defendemt>pieads"as~a clefenc"e' that it is tnie*, its falsity is not in issue, a,nd no~evidance-on that head is permissible. The pub- i lication has, to be taken(as false during the trial,-and the only ques- j tion is onenUdamage^LTf the truth.bo..pleaded as a defence,.the i burden is of course on'the defendant to make it out. But in the case of a qualifiedly pmulepTd^ommunication, the law is the reverse. The occasion of qualified privilege out of which the publication arose does away with the presumption of falsity, and raises a presumption of good faith in the defendant; and therefore if the defence of such qualified privilege be pleaded, and the occasion of qualified privilege be shown, either on the plaintiff’s case or afterwards, the burden is put upon the plaintiff of destroying the privilege in order to recover. This he may do by showing that the published matter was false and the publication malicious. Having proved the matter false, he proves malice by showing that the defendant knew it was false, or did not have probable cause to believe it to be true; for there is no privilege to lie — except the case of absolute privilege, which has a very limited application, and with which we are not now dealing. If the defence of the truth be pleaded and proved, the defence of qualified privilege is unnecessary; it does not need to be invoked ; but if the defence of the truth be not made out, or be not pleaded (as is the case here), but only the defence of privilege, the burden jsjyijh^plaintiff.to defeai-the privilege, when the privileged occasion is shown, in the way stated in the foregoing (Hume v. Kusche, 42 Misc. Rep. 414, 421). Applying these rules to this case, it is apparent that the non-suit was error. 1. Assuming that the evidence for the plaintiff showed that the occasion of the communication was one of qualified privilege, the case was nevertheless for the jury, for there was also evidence tending to destroy the privilege, viz., that the published matter was false, and that the defendant knew it was false, or did not have probable cause to believe it to be true. A trial Judge may not take a case from the jury unless the facts be undisputed, and not then unless different inferences may not be drawn therefrom in respect of the ultimate fact or facts to be found. The defendant, and Mr. Clemens, to whom the defamatory communication was addressed, had corresponding pecuniary interests in the company as stockholders ; but that was only lawful occasion for them to address communications to each other honestly and in good faith for the welfare or protection of such interests (Odgers on Libel & Slander, ch. 9, p. 234, sub. II; Broughton v. McGrew, 39 Fed. Rep. 672; Scullin v. Harper, 78 id. 460); and whether the defendant’s communication was of that character was the controlling fact which should have been submitted to the jury, if the rule of qualified privilege was applicable. 2. But as the case stood, viz., on the evidence of the plaintiff’s side only, no occasion of qualified privilege was shown. It appeared that a new board of directors favorable to the plaintiff had been elected, that the defendant was engaged with others in the enterprise of trying to keep it out and the old board in, and that he sent the defamatory telegram in furtherance thereof. That only a minority of the stock of the corporation was voted on at the election of the directors did not make the election illegal; the stockholders attending or represented make a quorum (Stock Corporation Law, § 20; Matter of Rapid Transit Ferry Co., 15 App. Div. 530). The law of privilege does not cover unlawful objects or purposes. It may be that the defendant is able to establish the invalidity of the said election, in which case an occasion of qualified privilege would appear. This matter must be left for careful consideration on the new trial. 3. The sending of the communication by telegraph was not such a disclosure of it to others as destroyed the privilege. That is a usual means of communication, and the facts of this case do not constitute an exception to the rule (Klinck v. Colby, 46 N. Y. 427; Edmondson v. Birch & Co., 1 K. B. Div. [1907] 371). The judgment should be reversed. Woodward, Jenks, Burr and Rich, JJ., concurred. Judgment and order reversed and new trial granted, costs to abide the event.