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District Court of Appeal, First District, Division 2, California.

S. M. SAROYAN, Plaintiff and Appellant, v. William A. BURKETT, Defendant and Respondent.*

Civ. 19552.

Decided: October 31, 1961

Shirley, Saroyan, Cartwright & Peterson, Marvin E. Lewis, Robert E. Cartwright, San Francisco, for appellant. Stanley Mosk, Atty. Gen., Harold B. Haas, Asst. Atty. Gen., Victor Griffith, Deputy Atty. Gen., for respondents.

In this action for damages for defamation, plaintiff appeals from a judgment entered on an order granting defendant Burkett's motion for judgment on the pleadings. Such a motion is in the nature of a general demurrer and, in ruling thereon, the court must treat all of the allegations of fact in the complaint as being true. MacIsaac v. Pozzo, 26 Cal.2d 809, 812–813, 161 P.2d 449. The court may also consider matters of judicial notice as though included in the complaint. Weil v. Barthel, 45 Cal.2d 835, 837, 291 P.2d 30.

Summary of Facts as Alleged in Complaint

From January, 1942, to and including December, 1955, plaintiff was employed as the attorney for the Superintendent of Banks of the State of California in connection with all matters pertaining to the liquidation and conservatorship of the Japanese banks in California, including The Yokohama Specie Bank, Ltd., San Francisco and Los Angeles offices; that his said employment during said period was a matter of common knowledge in the San Francisco Bay area, particularly among his clients and friends.

On December 12, 1958, Burkett, the superintendent of banks, prepared and issued a press release in which he stated: that suit had been filed that day by him, in his official capacity, to determine the ownership of some $10,000,000 in Japanese government bonds which had been seized by federal government agents on July 29, 1941, from the Yokohama Specie Bank, San Francisco office, and held by his department during the liquidation of Japanese banks taken over during the war with Japan; that he had ignored statements that the bonds were worthless and had opened an investigation relating thereto some eight months before; that as a result, he had received word that the bonds were still considered an obligation of the Japanese government, although requiring revalidation; that ownership of the bonds has never been determined; that he hoped to have the bonds delivered to the State Treasury if ruled to be property held in safekeeping by the Japanese bank or if ruled to be assets of said bank or of the Japanese government to the Alien Property Custodian of our federal government; that the investigation so far had indicated that $1,736,000 worth of unmarked bonds were definitely of value and that $7,885,100 in mutilated bonds may also still be of value.

That Burkett's purpose in issuing said press release was to create a favorable impression of himself on Governor-elect Edmund G. Brown in order to obtain a re-appointment from him and to injure and defame plaintiff as an attorney at law; that plaintiff himself had made a thorough investigation as to the validity, value and ownership of the bonds in question as a part of his said employment.

That on December 16, 1958, two widely circulated newspapers, to wit, ‘The San Francisco Examiner’ and ‘The San Francisco Chronicle,’ each published an article concerning plaintiff and the subject matter in the press release; that the statements in said articles which are hereinafter referred to were made by Burkett; that copies of said articles are attached to and included in the complaint.

The Examiner article, after identifying plaintiff as the attorney ‘who handled the liquidation of millions of dollars in confiscated Japanese bonds' quoted him as saying that the bonds were ‘completely worthless' and that ‘even if the bonds had value, they would belong not to the State but to the United States Alien Property Office,’ it then stated that Burkett had ‘quickly retorted’ that plaintiff's opinion was in itself ‘worthless' and that ‘the whole matter was an issue for a court to determine’; that ‘Last September [1957] Burkett obtained a court decision reducing Saroyan's fee by 46 per cent for his liquidation work in the prior administration’; that Burkett stated that ‘Mr. Saroyan is not an authority on these bonds,’ that ‘He has been completely repudiated in the past,’ and that ‘he [Burkett] has been advised by Japanese Government and banking officials that the bonds could be revalidated’; that Burkett further said that ‘Saroyan is getting into this to justify his not doing anything about the bonds when he was in charge of them. Let him come into court and prove his statements.’

That the Chronicle article contained the following:

‘A Federal Justice Department investigation of the liquidation of the Yokohama Specie Bank, Ltd., will be sought by State Bank Superintendent William A. Burkett, it was announced yesterday.

“I fired him,' the State bank chief said, ‘and I got a bill for $100,000.

“I took it to Superior Court as excessive, and I got a verdict cutting it by 46 per cent. But I think something ought to be done about these fees. They're too high.'

“I say we should investigate and find out why those bonds were left gathering dust in a safe deposit box.

“I want the Justice Department to look into this and, in particular, to Saroyan's conduct in office.'

‘The State bank chief based his claim on a statement from Henry F. Swift & Co. that heir [sic] current value is $15 million; on a statement by the Bank of Tokyo, that the bonds are negotiable, and on a listing by the Japanese Government indicating the bonds haven't been canceled or cashed.’

That said statements concerning plaintiff were false and Burkett knew they were false at the time he made them; that Burkett made said statements to the reporters of said newspapers with the purpose and intent of injuring and defaming plaintiff as an attorney by having them published in said newspapers.

That such statements by Burkett were meant to and did convey to the general public that plaintiff was (1) negligent in the performance of his duties as an attorney for his then client (superintendent of banks) in determining the validity, value and ownership of said bonds; (2) that plaintiff is unethical in the practice of his profession in that he charges unreasonable attorney fees; (3) that he has been guilty of criminal conduct in the performance of his professional services in connection with the liquidation of said Japanese banks and should be investigated by the Department of Justice; and (4) that for these reasons he was ‘fired’; that by reason of said statements plaintiff has been damaged in his occupation as an attorney; the prayer asks for general and punitive damages.

It may fairly and reasonably be said that ‘* * * the natural and probable effect [of Burkett's statements] upon the mind of the average reader * * *’ would be to convey to him that plaintiff as an attorney either lacked ability or was negligent in the performance of his professional duties and that he also lacked integrity. MacLeod v. Tribune Publishing Co., 52 Cal.2d 536, 551, 343 P.2d 36, 44. It is obvious that such statements would tend directly to injure him in respect to his profession or occupation as an attorney. (Civ.Code, §§ 45, 46, subd. 3)

Plaintiff alleges, and we must at this time assume, that the statements were false, were known to Burkett to be false when made, and were made by him with the intention of injuring and defaming plaintiff as an attorney.

Burkett urges the truth of the statement concerning fees charged by plaintiff. We take judicial notice that on May 29, 1957, in action 309116, in the Superior Court of the State of California in and for the City and County of San Francisco, entitled ‘In the Matter of The Yokohama Specie Bank, Ltd., a Banking Corporation, in Liquidation,’ Burkett, as superintendent of banks, filed a petition to determine the reasonable value of legal services for which plaintiff had rendered a bill for $95,914.89 and that, on July 10, 1958, after a trial, judgment was rendered fixing such value at $52,000. Flores v. Arroyo, 56 Cal.2d 492, 15 Cal.Rptr. 87, 364 P.2d 263.

We are also mindful that the articles indicate the interest of our federal government in the bonds and that this might be the interpretation to be placed upon Burkett's expressed desire to have the Department of Justice ‘look into * * * Saroyan's conduct in office.’ But, as stated in the MacLeod case, supra, 52 Cal.2d at pages 550–551, 343 P.2d at page 44: ‘Such hair-splitting analysis of language has no place in the law of defamation, dealing as it does with the impact of communications between ordinary human beings. * * * It not only finds no support in, but is contrary to, the provisions of section 45a, which define, not language susceptible of only one meaning, but language that carries a defamatory meaning on its face. * * *’

Assuming, without deciding, that the outcome of the attorney fee litigation proved that plaintiff had charged excessive fees, it would still leave the other statements made by Burkett and the implications which reasonably could be drawn therefrom. So long as these remaining statements are actionable, a cause of action has been stated in the absence of absolute privilege.

The question of qualified privilege is not before us at this time because the allegations of the complaint, if true, establish malice and therefore destroy such privilege. Washer v. Bank of America, 21 Cal.2d 822, 831, 136 P.2d 297, 155 A.L.R. 1338.

The press release is attached to and made a part of the complaint by reference. There is nothing in it which is defamatory of anyone and the plaintiff is not referred to therein, directly or indirectly. Section 258 of the Financial Code requires the superintendent of banks to make accessible to the public a bulletin board upon which he shall cause to be posted once each week a detailed statement giving general information with regard to the work of his department since the preceding statement. If, as a matter of convenience to the press, he furnishes copies to it of matters which properly would come under his statutory duty just mentioned, it would not be any more actionable than if the dissemination of the information had been confined to the bulletin board.

As a matter of fact, although it is not entirely clear from the complaint, plaintiff bases his cause of action entirely upon the defamatory matter contained in the two newspaper articles and not upon the press release.

Did Burkett Have an Absolute Privilege?

The answer to this question depends upon a proper interpretation of section 47 of the Civil Code, which provides that ‘A privileged publication * * * is one made—1. In the proper discharge of an official duty.’

Burkett takes the position that the statements attributed to him come within the purview of his provision and he is therefore cloaked with absolute immunity. We cannot agree.

It is true that the publicly aired controversy between Burkett and plaintiff came about by reason of the fact that Burkett was the superintendent of banks. But the question remains, what official duty was he discharging in castigating plaintiff for conduct during the period 1942–1955? Three years after plaintiff's services had terminated, Burkett announces that he had instituted a proceeding to determine the ownership of the bonds. This was certainly in the performance of his duties and his public report (press release) was in keeping with the provisions of the Financial Code. But then, a few days later, to go on and make the statements concerning plaintiff which he did was certainly not in the discharge of any official duties. To say the least, whether these statements were in the ‘proper discharge’ of his official duties would be a question of fact to be determined by the trier of fact.

The Supreme Court of California has recently held that three school trustees could be held personally liable for defamatory statements made to newspaper reporters and members of the public concerning plaintiff, who was the superintendent of their school district. Lipman v. Brisbane Elementary School Dist., 55 Cal.2d 224, 11 Cal.Rptr. 97, 359 P.2d 465. However, statements made by these same officials in the course of questioning others about plaintiff's fitness or in discussing plaintiff among themselves and the district attorney and the county superintendent of schools were held privileged since they were all under a statutory duty to make such investigation. The opinion states, 55 Cal.2d at page 234, 11 Cal.Rptr. at page 102, 359 P.2d at page 470.

‘A different situation, however, is presented by the allegations that the trustees made statements to various persons including newspaper reporters and members of the public to the effect that plaintiff suppressed facts from the board, tampered with minutes of board meetings, received ‘kickbacks' from district employees, engaged in ‘shady dealings' and ‘cleaned up’ on business transactions involving the district.

‘False statements of this type are clearly defamatory within the meaning of sections 45 and 46 of the Civil Code, and they would obviously make it difficult and burdensome for plaintiff to perform her contractual obligations. The statements allegedly made to the press and to members of the public were not confined to reports of charges that were being made; they purported to be statements of fact and were beyond the scope of the trustees' powers. In making these statements the three trustees were not within the immunity rule, and a cause of action is stated against them. * * *’

The judgment is reversed.

AGEE, Justice.

KAUFMAN, P. J., and SHOEMAKER, J., concur.