Morris v. Iron & Steel Co.

[Vol. IX, N. S.

"Order allowing receiver to run plant and to borrow money not to exceed $20,000 on receiver's certificates, on condition that two notes, upon which plaintiff is surety, of $2,800 and $3,000, held by National Bank, Pittsburgh, and 166 shares of his stock is returned to him, or to his attorney. Entry not to go on until complied with."

Now, I do not know why this order was ever made, and I have always thought, and still think, that it is beyond the power of a court, where a corporation has gone into the hands of a receiver, to order the receiver to continue the business, except in so far as it is necessary to complete unfinished contracts. I do not believe the court has any power to do it. That is, he has no power to order a receiver to continue the business of a corporation, generally, for the purpose of making money possibly (or, probably, of losing money) in the venture; and generally of losing it, because I never yet saw a business run at a profit under such circumstances or that made any money for anybody. The court was without authority to make this order, but it was made as the court has indicated. And the case is submitted upon the question of the priority of claims growing out of these orders.

It is not necessary to refer to any authorities in the matter. Counsel have presented ably prepared briefs, and the court has examined the authorities and is of the opinion that it exceeded its authority in ordering the $20,000 of certificates to be issued, and that the plaintiff's claim, or the claims of those who hold the certificates issued under the first order of the court, are prior in equity, and are entitled to be first paid out of the money in the hands of the receiver. And it may be so ordered.

BY JUDGE SWARTZ: What does the court mean by "the money in the hands of the receiver?"

THE COURT: Something was said about money in the hands. of the clerk. That is what I mean. I simply hold that it is a prior claim, in equity.

1910.]

Rudin v. Fauver et al.

PLEADING LIBELOUS MATTER.

Common Pleas Court of Lorain County.

FRITZ RUDIN v. LOU FAUVER, LEE STROUP AND RALPH OSBORN. *

Decided, November 27, 1909.

Libel and Slander-Pleader Privileged to Use Defamatory MatterEven Though False and Malicious, When-English Rule Applicable and to be Liberally Construed-Privilege Applies with Reference to Statements having Reference to any Proper Party to the Proceeding.

1. The rule which protects from an action for libel or slander one publishing in a judicial proceeding matter of a defamatory character, which is relevant and pertinent to the issue, should not be impaired by a close construction, but where the matter has legitimate reference to the inquiry reasonably full freedom should be allowed to a pleader, and he should not be held liable for including in his pleading matters not relevant in the strictest legal and technical sense.

2. Where one is charged as a conspirator with others named as defendants, he is a proper though not a necessary party, and what is relevant and pertinent as to the other defendants is relevant and pertinent as to him, and allegations which have a direct relation to the cause or subject-matter of the inquiry is relevant as to him.

Fritz Rudin, for plaintiff.

Fauver & Stroup, contra.
WASHBURN, J.

This is an action at law brought by Fritz Rudin, an attorney practicing at this bar, against Lou Fauver and Lee Stroup, who are also attorneys, and one Ralph Osborn, to recover damages for a libel contained in a petition filed by the said Osborn against the plaintiff and Lloyd Townsend and William Krage.

The petition in this case alleges that said Osborn was seeking relief in said action from an execution issued upon a judgment which said Townsend and Krage had previously recovered against him, which judgment said Osborn claimed in his said action to have been satisfied and discharged, and that said satisfaction * Affirmed by the Circuit Court without report, December 28, 1909.

Rudin v. Fauver et al.

[Vol. IX, N. S.

and discharge was in writing, signed by said judgment creditors, Townsend and Krage, and entered upon the docket of the justice of the peace by whom the judgment was rendered. The libelous matter complained of which was contained in that petition brought by said Osborn against said Rudin, Townsend and Krage, is as follows:

"Plaintiff avers that at the time such transcript was filed with the clerk of said court on the 17th day of February, 1909, the defendant, Fritz Rudin and the defendants Lloyd Townsend and Wm. Krage, had full knowledge that said judgment had been fully released and discharged, and that such release and discharge appeared upon the records of said justice, but that notwithstanding said knowledge on the part of said defendants, they caused such transcript to be filed as aforesaid, knowing that the same was not a true and correct transcript of all the proceedings in said cause, and for the purpose of fraudulently attsmpting to perfect a lien against plaintiff's property, and for the purpose of corruptly and fraudulently attempting to extort further payments from plaintiff upon said judgment, and that the said above named defendants, Fritz Rudin, Lloyd Townsend and Wm. Krage conspired and connived together for the aforesaid corrupt and unlawful and fraudulent purposes, well knowing that at the time, said judgment had been released and discharged and that the transcript above referred to was not a true and correct transcript of the proceedings of said justice.

"That on or about the 17th day of March, 1909, the said defendants, Fritz Rudin, Lloyd Townsend and Wm. Krage, for the purpose of further carrying out their object of corruptly and fraudulently extorting money from this plaintiff, caused an execution to be issued from the court of common pleas of said county to the defendant, R. C. Ward, as sheriff of Lorain county.”

The petition in this case alleges "that all of the said allegations charging this plaintiff with wrongdoing as aforesaid, are, as said defendants and each of them, well know, false in every particular and wholly untrue, and were made against this plaintiff for ulterior purposes, and solely to bring injury and harm upon plaintiff, and not because of any necessity or pertinency of the same to said action of said Osborn."

And the petition also charges: "that naming plaintiff as a party defendant as aforesaid in said action and making the said false allegations and charges was wholly gratuitous, unnecessary,

irrelevant, improper and immaterial to the alleged and claimed cause of action and relief sought by said Osborn in his said suit number 9832, and had no legitimate pertinency thereto."

A demurrer has been filed to this petition on behalf of Fauver and Stroup, the claim being that the petition shows on its face that the libelous matter was absolutely privileged.

It seems to be well settled in England that judges, counsel, parties and witnesses are absolutely exempt from liability to an action for defamatory words published in the course of judicial proceedings, and that the same doctrine is generally held in the American courts, with the qualification as to parties, counsel and witnesses, that their statements made in the course of an action must be pertinent and material to the case. If they are so pertinent and material, they are absolutely privileged (127 Mass., 316).

"Matter alleged in an answer, if pertinent and relevant, can never give a right of action for libel, though false and alleged with malice" (47 S. W., 884). This is the well settled and almost universal rule in the United States.

From the petition in this case it appears that the libelous matter was contained in a pleading filed in a court of justice having jurisdiction, and that the plaintiff who is now complaining was a party defendant to the action. Hence, if the matter complained of was relevant and pertinent in that case, this action can not be maintained. And the controlling question now before the court is: Does it appear from the face of this petition that the libelous matter complained of was relevant and pertinent in the case in which the publication was made?

The proper determination of this question necessitates the consideration of the object and purpose of the privilege and what the courts have held is meant by the term "relevant" and "pertinent" in the statement of the American qualification of the English rule.

In a case determined by the supreme court of Maryland in which all of the authorities, both English and American, are reviewed, it is decided that "this privilege, protecting against a suit for libel or slander, is founded upon what should seem to be a sound public policy which looks to the free and unfettered

Rudin v. Fauver et al.

[Vol. IX, N. S.

administration of justice, though, as an incidental result, it may in some instances afford an immunity to the evil-disposed and malignant slandered" (14 Atlantic, 518).

In another case decided by the same court and found reported in 14 Atlantic, 505, we find this language at page 510:

"We can not agree with Brett, M. R., that in a suit against counsel for slander the only inquiry is whether the words were spoken in a judicial proceeding, and if so the case must be stopped. We quite agree, however, with Bramwell, Judge, in Seaman v. Nethervlift, that 'relevant' and 'pertinent' are not the best words that can be used. These words have, in a measure, a technical meaning, and we all know the difficulty in determining in some cases what is relevant or pertinent. With Lord Chancellor Cairnss we prefer the words 'having reference' or 'made with reference,' or in the language of Shaw, Chief Justice, 'having relation to the cause or subject-matter.' And if counsel in the trial of a case maliciously clanders a party or witness or any other person in regard to a matter that has no reference or relation or connection with the case before the court, he is and ought to be answerable in an action by the party injured."

The rule is refrred to in 25 N. E., 1048, in the following language:

"In questions falling within this absolute privilege, the question of malice has no place. However malicious the intent, or however false the charge may have been, the law, from considerations of public policy, and to secure the unembarrassed and efficient administration of justice, denies to the defamed party any remedy through an action for libel or slander. This privilege, however, is not a license which protects every slanderous publication or statement made in the course of judicial proceedings. It extends only to such matters as are relevant or material to the litigation or, at least, it does not protect slanderous imputations plainly irrelevant and impertinent, voluntarily made, and which the party making them could not reasonably have supposed to be relevant. The policy upon which the doctrine of privilege rests does not call for an extension of the privilege in such cases. The public interests are sufficiently protected when the privilege is limited to communications which fairly ought to have been made, or, in case of judicial proceedings, to matters not wholly outside of the cause. But no strained or close construction will be indulged to exempt a case from the protection of privilege."

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