WASHER v. BANK OF AMERICA NAT TRUST SAVINGS ASS ET AL

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District Court of Appeal, First District, Division 1, California.

WASHER v. BANK OF AMERICA NAT. TRUST & SAVINGS ASS'N ET AL.*

Civ. 11728.

Decided: March 16, 1942

William H. Mackay, of San Francisco, for appellant. Louis Ferrari, G. D. Schilling, and Kenneth M. Johnson, all of San Francisco, for respondents.

In this case a general demurrer was sustained to a second amended complaint without leave to amend. The appeal is from the judgment thereupon entered. The complaint contains two counts, one sounding in libel and the other in slander. No point is made by the respondents that the demurrer was sustained only to the complaint generally. As is stated in their brief, each count is founded on the same publication and the arguments in defense of the alleged statement apply equally to each count.

The defamation alleged is set out in paragraph three of the complaint wherein it is pleaded that the defendant Fenton, who at the time was vice–president of the defendant bank and its personnel director, made of and concerning the plaintiff the following statement: “We cannot see how this institution could possibly reinstate anybody who had admitted he had falsified his expense account, who has been guilty of flagrant insubordination.” This statement, so it is alleged, was made at a gathering of newspaper reporters and others who had assembled for the purpose of obtaining the views of the defendant bank upon a decision of the National Labor Relations Board by which decision the defendant bank had been ordered to reinstate the plaintiff in its employ.

A copy of this decision, consisting of the findings of the board and its order, is attached to the complaint and made a part thereof by way of exhibit. From the findings it appears that the defendant bank is one of the ten largest in the world, and one of the five largest in the United States with a branch in London, England, in addition to 493 branches in 307 California communities. The findings indicate that it does business through correspondents in at least thirty–four states of the Union, with resources of approximately one and one–half billion dollars, earning for its stockholders over twelve million dollars in paid dividends and undivided profits in the year 1936. The respondent employed the appellant, Washer, in the chief clerk's division of its trust department in Los Angeles in March, 1935, at a salary of $125 per month. Prior to this employment, he had had approximately fifteen years of banking experience and was the holder of an LL.B degree. It appears that in 1937 Washer engaged in some union labor activities and was transferred to the Fresno branch of the defendant bank. Later, he was instructed to report at the San Jose branch of the bank, which instructions were changed and he was directed to report at the branch in Chico, California. Some friction developed between Washer and one Kieferdorf, the senior trust officer of the bank, and on November 10th, 1937, Washer made a trip to San Francisco from Chico to confer with Kieferdorf at Kieferdorf's request concerning the disagreement. A further controversy arose between the bank and Washer over his expense account for this trip. In the findings it is stated: “The expense account rendered by Washer for this trip amounted to $15.12. Of this, $6.12 represented Washer's railroad fare and $9.00 represented meals and lodgings while in San Francisco. After Washer submitted this expense account, it was returned to him by Kieferdorf with the request that he itemize his daily expenses. Washer replied to Kieferdorf stating that he was ‘writing off as a loss the $15.12 I considered a nominal but fair expense account for a two–day trip to San Francisco made upon your order.’ Kieferdorf thereupon wrote to Washer stating that there was ‘no complaint as to the amount of the expense involved’ and asking Washer to return the expense statement, which Washer did. He then received a check payable to him in the amount of $15.12 with which there was enclosed a new statement of traveling expenses which Washer was asked to sign and return. This new statement had been prepared by the respondent and contained a purported itemization of Washer's expenses on the San Francisco trip. Washer thereupon wrote a letter, addressed to the trust officer from whom he received this new statement, explaining that his failure to itemize the expenses, in the first instance, was due to the fact that while in San Francisco he had stayed with friends and as a result had not incurred a hotel bill. He explained, however, that he had thus become obligated to his friends and it had been necessary for him to reciprocate by entertaining them while in San Francisco, and that the expenses actually incurred by him on the trip exceeded $15.12. With this letter, Washer returned the check and asked that the respondent return the check to him ‘if after reading this letter you are convinced of the fairness of the account as rendered. * * * If you do not consider the accounting satisfactory you may forget the entire matter.’ The account was then approved by the respondent and the check returned to Washer.”

The board states in its findings that “The respondent relies upon this incident to show that Washer made a false claim and was, therefore, dishonest. We find no merit in this contention. It would appear that had Washer been dishonest he would not have returned the check insisting that he did not want to receive payment unless the respondent understood thoroughly the entire situation.”

The board further found that the defense of the respondent based on insubordination was not supported by the evidence.

Both actual and punitive damages are claimed by the plaintiff.

The respondents take the position that the alleged words are not actionable per se; that there is no sufficient allegation of damage; that the truth of the statement is demonstrated in the findings of the National Labor Relations Board; and that the complaint shows upon its face that both the bank and the defendant Fenton were, upon the occasion of the publication, clothed with both an absolute and qualified privilege under the provisions of section 47 of the Civil Code.

Libel is defined as a “false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation,” by section 45 of the Civil Code.

Section 46 of the same code defines slander as “a false and unprivileged publication other than libel, which”, among other things, “charges any person with crime”, or “tends directly to injure him in respect to his office, profession, trade, or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits.”

Defamatory words may be actionable or not according as they are or are not denounced by the statute. If the words uttered fall within the ban of the statute they may be actionable in themselves. If their injurious effect is not readily ascertainable upon their face, the plaintiff before he can recover is required to plead the injury by proper allegation and support it with proof. But if the publication is of unprivileged and unfounded statements and charges which expose a person to contempt or obloquy, or which tend to injure him in his occupation in their natural consequence, the law presumes an injury from the bare fact of the publication itself. In either case it is the uttered words which are the natural and proximate cause of the pecuniary damage. In the one case the damage must be pleaded and proved, and in the other it is conclusively presumed to result. A publication which is actionable per se, imports malice as well as damage. As is stated in Turner v. Brien, 184 Iowa 320, 167 N.W. 584, 585, 3 A.L.R. 1585, “upon the proof of such publication, the law will presume the falsity of the matter charged, that the publication was with malice, and that some damage follows.” Neither the damage nor the malice need be pleaded or proved where the words are actionable in themselves. The utterance of the defamatory words is all that is required to be shown. Tonini v. Cevasco, 114 Cal. 266, 46 P. 103; Schomberg v. Walker, 132 Cal. 224, 64 P. 290; Bohan v. Record Publishing Co., 1 Cal.App. 429, 82 P. 634; Dewing v. Blodgett, 124 Cal.App. 100, 11 P.2d 1105; Semple v. Andrews, 27 Cal.App.2d 228, 81 P.2d 203; Rosenberg v. J. C. Penney Co., 30 Cal.App.2d 609, 86 P.2d 696; Gilman v. Lowell, 8 Wend., N.Y., 573, 24 Am.Dec. 96; Harris v. Curtis Pub. Co., 49 Cal.App.2d 340, 121 P.2d 761.

Words which are alleged to be defamatory are to be considered according to their natural import, and as ordinary hearers would understand them. The court should as nearly as possible place itself in the position of a hearer or reader of the words and determine the meaning of the language according to its natural and popular construction so that the interpretation may be fair and unstrained. As the court said in Bettner v. Holt, 70 Cal. 270, 11 P. 713, 715, “And not only is the language employed to be regarded with reference to the actual words used, but according to the sense and meaning, under all the circumstances attending the publication, which such language may fairly be presumed to have conveyed to those to whom it was published; so that in such cases the language is uniformly to be regarded with what has been its effect, actual or presumed, and its sense is to be arrived at with the help of the cause and occasion of its publication.” In most cases the circumstances giving rise to the publication are of great importance in determining whether the words violate the statute. In this connection the relations existing between the parties, their standing in the community, the time and place of the publication, and the persons to whom it was addressed are all important factors to be considered. Tonini v. Cevasco, supra; Schomberg v. Walker, supra; Bettner v. Holt, 70 Cal. 270, 11 P. 713; Cole v. Millspaugh, 111 Minn. 159, 126 N.W. 626, 28 L.R.A.,N.S., 152, 137 Am.St.Rep. 546, 20 Ann.Cas. 717. They are indicative of the motive of the speaker and tend to show how the words were intended, or received and understood. This is especially true where character is involved or the fitness of one to occupy a position or to follow a profession is assailed.

It is common knowledge that in every community the banker has stood for decades as a symbol of character and integrity. He has been generally acclaimed as the custodian of the widow's mite, and counsel for the orphan. Only in rare cases has the banker failed to live up to this public trust. In speaking from such a position, the defendant here, with its influence reaching into practically every community in the state, into almost every state in the union, and across the ocean, was in a position by its slightest word to do great good or great harm. There can be no question but that the words were uttered concerning the plaintiff, although his name was not used. No other person was involved in the controversy between the officials of the bank and the plaintiff, or in the proceedings before the National Labor Relations Board. The words are limited to its regard of Washer by the bank. The statement clearly bases this regard upon their past dealings. It does not in any sense purport to be a criticism of a political principle or of a public policy. Nor is it a statement of economic theory. The words were aimed directly at Washer, and the natural imputation attached to them is thievery and falsification. Coming from a bank of such character and standing as the defendant, occupying the position that it does in the banking world, they could have but one effect, and that to blight the reputation of the plaintiff. Spoken of one engaged in the banking business in which integrity and character are of such prime importance, the words were devastating and come squarely within the code definitions of both libel and slander. Draper v. Hellman Com. T. & S. Bank, 203 Cal. 26, 263 P. 240.

When the words uttered are actionable per se, as here, in order to avoid liability the defendant may show that the statement was in fact the truth, or that he had a right or privilege to make it. However, it is incumbent upon him to specially plead and prove the truth of the charge, or that it was privileged, including the absence of malice, unless the truth of the statement or the privilege appear upon the face of the complaint. Stevens v. Snow, 191 Cal. 58, 214 P. 968; Morcom v. San Francisco Shopping News, 4 Cal.App.2d 284, 40 P.2d 940; Hale Company v. Lea, 191 Cal. 202, 215 P. 900.

The right or privilege to make a statement otherwise actionable of or concerning another in this state is declared in section 47 of the Civil Code, where it is provided: “A privileged publication is one made––1. In the proper discharge of an official duty. 2. In any (1) legislative or (2) judicial proceeding, or (3) in any other official proceeding authorized by law; provided, that an allegation or averment contained in any pleading or affidavit filed in an action for divorce or an action prosecuted under section 137 of this code made of or concerning a person by or against whom no affirmative relief is prayed in such action shall not be a privileged publication as to the person making said allegation or averment within the meaning of this section unless such pleading be verified or affidavit sworn to, and be made without malice, by one having reasonable and probable cause for believing the truth of such allegation or averment and unless such allegation or averment be material and relevant to the issues in such action. 3. In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such relation to the person interested as to afford a reasonable ground for supposing the motive for the communication innocent, or (3) who is requested by the person interested to give the information. 4. By a fair and true report, without malice, in a public journal, of (1) a judicial, (2) legislative, or (3) other public official proceeding, or (4) of anything said in the course thereof, or (5) of a verified charge or complaint made by any person to a public official, upon which complaint a warrant shall have been issued. 5. By a fair and true report, without malice, of (1) the proceedings of a public meeting, if such meeting was lawfully convened for a lawful purpose and open to the public, or (2) the publication of the matter complained of was for the public benefit.”

The privilege provided in subdivision 1 and 2 of section 47 is usually referred to as an absolute privilege, as an absence of malice is not essential to make it available. The privilege referred to in the other three subdivisions is commonly referred to as a qualified privilege as it is incumbent upon the defendant to show an absence of malice before he can claim its benefits. Such an absence of malice is an express limitation upon the qualified privilege accorded under these subdivisions of section 47 of the Civil Code. Hale Company v. Lea, supra. In either case, as already stated, privilege is open only as a special defense, unless it clearly appears upon the face of the complaint.

No tenable ground here appears upon the face of the complaint which justifies an absolute privilege. In making the statement to the newspaper reporter as alleged, the defendants obviously were not acting in the discharge of any official duty nor participating in any legislative proceeding. No language has been pointed out, and neither is there any in the complaint, which would tend to show that the statement made to the newspaper reporters after the decision was made and the order of the board had been entered is in any way relevant or material to the proceedings. If, as contended by respondents, they intended to appeal from the order, there is nothing in the complaint to so indicate. The complaint does not plead any absolute privilege in the defendants.

Any qualified privilege to which the respondents may be entitled must, under the circumstances of the case, arise under subdivision 3 of section 47. In all cases involving the question of qualified privilege, the existence or non–existence of malice is of prime importance. Here, we are only concerned with it insofar as it may, or may not, be a pleaded fact. The plaintiff, in addition to pleading the actionable statement which imports actual malice (Tingley v. Times Mirror Co., 151 Cal. 1, 89 P. 1097), has alleged that said statement was made by Fenton with malice, for the purpose of injuring, disgracing and defaming plaintiff, and interfering with his ability to obtain employment; that it was false and known by Fenton to be false at the time it was made and Fenton did not have probable cause or any cause for believing it to be true; and that the statement was made and given to the newspaper reporters by Fenton for the purpose of having it printed in various newspapers; and that he, Fenton, requested the reporters to print and publish the statement and that it was printed and published in various newspapers throughout the country. An intent upon the part of the respondents to injure the plaintiff by the utterance of the defamatory words is alleged, and this is a sufficient allegation of actual malice. Tingley v. Times Mirror Co., supra; Siemon v. Finkle, 190 Cal. 611, 213 P. 954. Where malice is pleaded, or may be inferred, and the complaint otherwise shows upon its face that a libelous publication was made to others, a cause of action is stated regardless of whether the persons to whom the publication is addressed are interested or not. Layne v. Kirby, 208 Cal. 694, 284 P. 441.

It is, of course, elementary that upon the publication of a statement actionable in itself, a cause of action for both actual and punitive damages is conclusively established. As is said in Tingley v. Times Mirror Co., supra [151 Cal. 1, 89 P. 1102], “Where the publication is libelous per se, the law presumes malice in fact in its publication, and, in the absence of evidence on the part of the defendant rebutting this presumed malice, plaintiff is entitled to an award of exemplary damages”.

Actual damages are both general and special. General damages are such as compensate for the natural and probable consequences of the libel. Special damages, as a branch of actual damages, are such as will compensate for the actual pecuniary loss sustained. While general damages may be recovered in the absence of actual proof and upon a general allegation of damage to an amount which in the estimation of the jury will compensate the plaintiff, special damages must be alleged and proved, unless the publication is actionable per se. Harris v. Curtis Publishing Co., supra; Bates v. Campbell, 213 Cal. 438, 2 P.2d 383; Layne v. Kirby, supra. The complaint here alleges that prior to the defamatory publication the plaintiff had an excellent reputation in the banking business for honesty, integrity and efficiency as a bank employee and as an attorney, and that the publication of the statement proximately and materially damaged his reputation among bank and trust companies to the extent of rendering him unable to secure employment at his trade or employment presently and in the future. A similar allegation based upon an alleged libel was held to be a sufficient allegation of both general and special damages in Oberkotter v. Woolman, 187 Cal. 500, 202 P. 669. Turner v. Hearst, 115 Cal. 394, 47 P. 129, and Waite v. San Fernando Pub. Co., 178 Cal. 303, 173 P. 591, are to the same effect. The general rule is that in actions of tort, damages arising out of loss of earning power are ordinarily considered under the allegation of general damages. Hoffmann v. Lane, 11 Cal.App.2d 655, 54 P.2d 477; Zibbell v. Southern Pacific Co., 160 Cal. 237, 116 P. 513.

We are of the opinion that the demurrer should not have been sustained.

The judgment appealed from is reversed and the cause remanded with instructions to the trial court to overrule the demurrer and permit the defendants to answer if they are so advised.

B. C. JONES, Justice pro tem.

PETERS, P. J., and WARD, J., concurred.