No. 13579
I N THE SUPREElE COURT O THE STATE O M N A A
F F OTN
JEFFREY GRANGER and DAVID GRANGER,
P l a i n t i f f s and A p p e l l a n t s ,
-vs-
TIME, I N C . , a C o r p o r a t i o n ,
D e f e n d a n t and Respondent.
....................................................
PHOEBE ANN GOLD; DR. ALLAN J . GOLD;
ERNEST P. COHEN; JESSE M. COHEN;
OLIVER R . LEVY; J . M . SHERICK and
D I A N E M. SHERICK, Husband and Wife,
and J O D I , I N C . ,
P l a i n t i f f s and A p p e l l a n t s ,
-vs-
TIME, I N C . , a C o r p o r a t i o n ,
D e f e n d a n t and R e s p o n d e n t .
Appeal from: D i s t r i c t C o u r t o f t h e Second J u d i c i a l D i s t r i c t ,
Honorable R o b e r t J. Royd, J u d g e p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t s :
Henningsen, P u r c e l l & G e n z b e r g e r , B u t t e , Montana
Rex F. Benningsen a p p e a r e d , B u t t e , Montana
C o r e t t e , S m i t h & Dean, B u t t e , Montana
K e n d r i c k Smith a r g u e d , B u t t e , Montana
For Respondents:
Crowley, Haughey, Hanson, G a l l a g h e r a n d T o o l e , B i l l i n g s
Montana
Bruce R. T o o l e a r g u e d , B i l l i n g s , Montana
H a r o l d R. Medina, J r . a r g u e d , N e w York, N e w York
Submitted: May 1 9 , 1977
Decided: A U G 3 (1 1977
Filed: RUG 3 797
Mr. Chief Justice Paul G. Hatfield delivered the Opinion of the
Court.
Plaintiffs appeal from the district court's ruling in
this libel action granting defendant's motions for summary
judgment.
Defendant, Time, Inc., publishes a national weekly news
magazine. The subject of this lawsuit concerns an article which
defendant published in its September 22, 1975, issue, entitled
"Into the Pit". The article described how the City of Butte,
which owed its birth and former prosperity to first gold, and
then copper mining was being relentlessly swallowed by Anaconda
Company's ever expanding open pit copper mining operation. De-
fendant in the article noted the economic deterioration in "the
once-stylish uptown district", observed that virtually no major
construction had taken place in Butte since 1962, and asserted
that "Arson has become common as people who are unable to sell
their devalued buildings burn them for the insurance."
Each of the plaintiffs had ownership interests in either
the Penney Building or the Pennsylvania Building. Fire destroyed
the Penney Building on February 28, 1972, and destroyed the Penn-
sylvania Building on August 20, 1975. Plaintiffs, in a letter
dated October 29, 1975, informed defendant that they believed the
statement in the article concerning arson referred particularly
to them and was false and libelous. Plaintiffs informed defen-
dant of its opportunity under section 64-207.1, R.C.M. 1947, to
correct the allegedly libelous matter. Defendant failed to re-
tract its statement concerning arson in the manner prescribed
by the statute, and plaintiffs, on December 19, 1975, filed a
complaint in district court, Silver Bow County, alleging that
defendant had libeled them by the statements concerning arson in
the article, "In the Pit".
Defendant filed a motion to dismiss plaintiffs1 complaints
for failure to state a claim upon which relief could be granted.
The district judge denied defendant's motion to dismiss. Defen-
dant subsequently filed its answer, denying the assertions in
plaintiffs' complaints that the arson statement was made of and
concerning plaintiffs and that the article was prepared with a
reckless disregard of the truth, and asserting that the statements
contained in the article were protected by the freedom of speech
and press guarantees of the First Amendment.
Plaintiffs and defendant thereafter filed the following
four exhibits:
(1) An "Editorial Reference File", containing the refer-
ence material upon which defendant based its article and the suc-
cessive drafts of the article;
(2) a "Memorandum for Counsel", containing interviews
with the persons involved in the investigation, writing, and pub-
lishing of the article;
(3) "The Butte Fire Memorandum", containing copies of
the fire incident statistical reports of the State Fire Marshall
Bureau of the State of Montana, Department of Justice, for the
years ending 1974 and 1975 and an analysis of fires during 1965-
1975 in an arbitrarily selected 58 square block area in the central
business district of Butte; and,
(4) a "Memorandum of Testimony" on behalf of plaintiffs,
containing interviews with each of the plaintiffs and with their
attorney. Plaintiffs and defendants stipulated that the state-
ments of tl Time, Inc., employees and statements of plaintiffs
ie
and their attorney as contained in the exhibits, were what " * * *
in substance and effect" they would testify to "for the purpose
of any motion or for the purpose of trial * * *."
Defendants, on May 6, 1976, filed a motion for summary
judgment and a memorandum in support of their motion. Plaintiffs,
on May 17, 1976, filed a cross-motion for summary judgment,
solely on the issue of liability, and likewise supported their
motion with a legal memorandum. On May 19, 1976, defendant moved
to disqualify the district judges of the second judicial district,
Silver Bow County. The Honorable Robert J. Boyd, judge of the
third judicial district, was thereupon appointed to hear all
further matters in the cause.
Plaintiffs and defendant argued the merits of their re-
spective motions for summary judgments before Judge Boyd on July
9, 1976. The district judge entered summary judgments far defen-
dant because:
"Viewing the matter as a stranger and with no
special knowledge possessed of the parties,
the Court is unable to ascertain any language
in the article which refers to some ascertainable
or ascertained person * * *."
Plaintiffs raise the following issues in their appeal
from the district court ruling:
1. Did the district judge, by granting defendant's motions
for summary judgment, reverse the previously disqualified district
judge's denial of defendant's motion to dismiss and thereby im-
properly exercise appellate jurisdiction?
2. Did the evidence support the district court's granting
of defendant's motions for summary judgment?
Plaintiffs contend that Judge Boyd was without jurisdic-
tion to grant defendant's motions for summary judgment. District
Judge James Freebourn had earlier denied defendant's motions to
dismiss plaintiffs' complaints for failure to state a claim.
After Judge Freebourn was disqualified and Judge Boyd was assigned
to the case, Judge Boyd granted defendant's motions for summary
judgments. Plaintiffs assert that Judge Boyd's granting of de-
fendant's motion for summary judgments was the equivalent of a
reversal of Judge Freebourn's denial of defendant's motions to
dismiss, and an improper exercise of appellate jurisdiction by
a trial judge.
The obvious flaw in plaintiffs' argument is that motions
to dismiss for failure to state a claim and motions for summary
judgment are distinct motions involving different questions of
law, and having different legal effects. Rule 12 (b)(6), M.R.
Civ.P., motion to dismiss is based solely on the allegations that
a plaintiff has made in his complaint. The denial of defendant's
motions to dismiss by Judge Freebourn was the law of the case
solely as to the sufficiency of the complaint. The denial of the
motions to dismiss meant that, in light of the complaint alone,
the trial court could not state " * * * for certain that plaintiff
is entitled to no relief under any state of facts which might be
proved in support of the claim." Keilrnann v. Mogan, 156 Mont.
230, 233, 478 P.2d 275.
Judge Boyd's granting of defendant's Rule 56, M.R.Civ.P.,
motions for sumnzary judgment, however, was a decision on the
merits of the case, and not merely a determination of the suffi-
ciency of the allegations in the complaint. In granting defen-
dant's motions for summary judgment, Judge Boyd considered matters
outside the complaint, including briefs and oral arguments of
counsel, written statements of witnesses, and various statistical
data concerning fires in Butte. The granting of the motions for
sumnzary judgment signified that, in light of the complaint and the
evidence before the court, there remained no disputed material
issue of fact which plaintiffs could prove to entitle them to re-
cover. Judge Boyd properly exercised his trial court jurisdic-
tion in ruling on the motions for summary judgment. See Amann v.
Northern Pacific Railway Co., 130 Mont. 11, 18, 292 P.2d 753 (1955),
for an expression of this rationale in a pre-rules case.
Plaintiffs next contend that the trial judge erred in
granting defendant's motions for summary judgments. The trial
judge held, as a matter of law, that the statement that "Arson
has become common as people who are unable to sell their devalued
buildings burn them for the insurance" does not point to any
ascertainable person. The judge further noted that nothing in
the record indicated that the buildings owned by plaintiffs were
"devalued". Finally, the trial judge recognized that, based on
the information contained in the "Butte Fire Memorandum" exhibit,
the group of "people who are unable to sell their devalued build-
ings" could include from 204 to 481 persons. Because plaintiffs
had not, in the trial court's view, presented evidence sufficient
to raise a factual question as to whether they were the specific
people in the group referred to, the court held that the common
law group libel rule precluded their recovery.
Plaintiffs agree that there is no material issue of fact
as to liability, but assert that, as a matter of law, they should
be granted summary judgment as to liability, with damages to be
determined at trial. Plaintiffs assert that defendant is clearly
liable for libel under section 64-203, R.C.M. 1947, because the
article was printed by defendant, distributed in Montana and nation-
wide, falsely accused plaintiffs of a crime (arson) and was written
"of and concerning the Plaintiffs."
The crucial issue in this case, as to defendant's lia-
bility for defamation under Montana law, is whether the article
was published "of and concerning" plaintiffs. See Rowan v. Gazette
Printing Co., 74 Mont. 326, 331, 239 P. 1035; Schaffroth y. he
Tribune, 61 Mont. 14, 17, 201 P. 271. Where a plaintiff is not
named in the allegedly libelous statement, he may present evidence
of the surrounding circumstances and facts to meet his burden of
proving that he was the person to whom the statement referred,
Nolan v. Standard Publishing Co., 67 Mont. 212, 216 P. 571. If
the arson charge in the article was false and was understood by
readers to specifically refer only to plaintiffs or to refer to
plaintiffs as members of a group small enough that the defamation
may reasonably be understood to apply to each group member, plain-
tiffs could recover. If, however, the statement concerning people
burning their buildings was reasonably understood by readers of
the article to refer to a large group, of which plaintiffs were
members, neither plaintiff nor any other member of the large group
has a cause of action for defamation. 3 Restatement of Torts 2d,
5564A. "As the size of the group increases, it becomes more and
more difficult for the plaintiff to show he was the one at whom
the article was directed, and presently it becomes impossible.* * * "
Louisville Times v. Stivers, 252 Ky. 843, 68 S.W.2d 411, 412.
The district judge, in granting defendant's motions for
summary judgment, relied on information contained in the "Butte Fire
Memorandum" exhibit. The memorandum, which contained records of
the Butte Fire Department and the State Fire Marshall Bureau of
the Montana Department of Justice, showed that during the period
1965-1975 in uptown Butte there were 159 fires, 56 of which were
attributed to arson, in buildings owned by a minimum of 204 persons.
In the entire city of Butte during 1974-1975, there were 481 fires,
108 of which were attributed to arson or suspicious acts. The
district judge held that using either the 204 or 481 figures, the
group of owners of buildings which had burned was too large to
cause a reader of the article to reasonably believe that the arson
charge was directed at plaintiffs.
Did plaintiffs prove by extrinsic facts and circumstances
that there remained a material issue of fact as to whether the
seemingly broad statement in the article, charging "people" with
burning their devalued buildings for the insurance, in fact was
reasonably understood by certain readers to be specially directed
at these plaintiffs? Plaintiffs rely on the following facts in
the court's exhibits: The investigator and author of defendant's
article talked with people about only four fires in uptown Butte,
two of which fires are the subject of this litigation; defendant
had no information at the time it published its article as to any
of the other fires listed in the "Butte Fire Memorandum"; no stip-
ulation was made as to the cause of the fires or their relevancy;
a prior draft of the article referred to "businessmen" burning their
devalued buildings, which was changed to the published reference to
"people" on the advice of the article's author that they could not
state as a fact that local businessmen were the ones committing the
arson. Plaintiffs assert that these facts show that defendant
specifically had plaintiffs in mind by its reference in the article
to "people" and that printing the arson charge, despite the author's
warning that they could not prove that businessmen were arsonists,
constituted actual malice due to a "deliberate disregard of the
truth and a reckless disregard of the falsity of the statement."
Plaintiffs have failed to show that the arson charge,
applicable on its face to a very large group, was reasonably under-
stood to apply specifically to plaintiffs. Even if we assume
arguendo that the author of defendant's article had knowledge of
only four fires in the business district, and that defendant meant
in its article to refer only to those four fires, and even if we
further igno~defendantsstatements to the contrary, plaintiffs
have failed to meet their burden of establishing a case for de-
famation. Whom the author has in mind when he publishes his article
is not determinative of the issue of liability. Libel and damage
consist in the apprehension of the hearers, not in the mind of the
author of the statement. Goldborough v. Orem & Johnson, 103 Md,
671, 64 A. 36. " * * * Plaintiff sought to show by circumstances
that the writer of the published article had him in mind, but his
unpublished intention is not material." Brodsky v. Journal
publishing Co., 73 S.D. 343, 42 N.W.2d 855, 857; Accord, Helmicks
v. Stevlingson, 212 Wis. 614, 250 N.W. 402.
Nor is it relevant to establishing a libel cause of action
that plaintiffs perceived that the allegedly defamatory statement
applied to them. In order that there be actionable libel, under
section 64-203, R.C.M. 1947, a plaintiff must show that people
in the community other than the plaintiff perceived the statement
to refer to the plaintiff. Without satisfying this requirement,
there clearly would not be the injury to reputation or occupation
that the statute requires. " * * * the test is neither the intent
of the author nor the recognition of the plaintiff himself that
the article is about him, but rather the reasonable understanding
of the recipient of the communication." Robinson v. Guy Gannett
Publishing Company, 297 F.Supp. 722, 726 (D. Maine 1969).
Plaintiffs in this case could have introduced as evidence
the statements of readers familiar with the circumstances in Butte
at the time the article was published to show that on reading the
article the readers knew the arson accusation was directed at
plaintiffs. Marr v. Putnam, 196 Or. 1, 246 P.2d 509, 516; Hous-
ton Printing Co. v. Moulden, 15 Tex.Civ.App. 574, 41 S.W. 381,
386. Plaintiffs evidence in their exhibit "Memorandum of Testi-
mony and Statement", however, dealt solely with plaintiffs own
emotional reactions to the article. The only references to re-
actions of others were statements by plaintiffs themselves con-
cerning a comment made to one plaintiff at a cocktail party that
the statement in the article was a terrible thing to do to him
and other property owners, and the statement of another plaintiff
that, although people told her the article was inaccurate and an
unfair statement, no one accused her of setting the fire, except
perhaps in a joking manner.
Plaintiffs have agreed that all matters were before the
court, from the pleadings and exhibits, on which to render a
decision as to liability. If readers of the allegedly libelous
article reasonably concluded that the arson charge was directed
at plaintiffs, plaintiffs failed to introduce any readers' state-
ments to that effect, and failed to offer any reason for their
failure to include such statements in the exhibits offered to
the district court. " * * * When on the record there is no
genuine issue as to any material fact before the court the bur-
den is on the party opposing the motion for summary judgment to
present facts of a material and substantial nature raising a
genuine issue. The trial judge has no duty to anticipate possible
proof that might be offered." Brown v. Thornton, 150 Mont. 150,
155, 432 P.2d 386 (1967). From the pleadings and exhibits, we
can discern no evidence to show the general statement in the
article as to arson was reasonably understood by readers to
specially apply to plaintiffs rather than to the large group of
200-400 "people" whose buildings in Butte were destroyed by fire.
In denying relief to a taxicab driver who was a member
of a defamed group of 60 taxi drivers, the District of Columbia
District Court stated:
"In case of a defamatory publication directed
against a class, without in any way identifying
any specific individual, no individual member of
the group has any redress. The reason for this
rule is that ordinarily a defamatory statement
relating to a group as a whole, does not necessarily
apply to every single member. A minority not in-
tended to be castigated has no legal cause for
complaint * * *." Fowler v. Curtis Pub. Co.,
78 F.Supp. 303, 304-305 (D. D.C. 1948), aff'd., 182
F.2d 377 (D.C. Cir. 1950).
Because the allegedly defamatory statements cannot reason-
ably be interpreted as applying specifically to plaintiffs, the
common law group libel rule precludes their recovering in a
defamation action. We adhere to this common law principle be-
cause the definition of libel in section 64-203, R.C.M. 1947 "is
but a statement of the common law rule". Manley v. Harer, 73
Mont. 253, 260, 235 P. 757. It is therefore unnecessary to
discuss whether the statement in the article concerning arson
was in fact true, or whether plaintiffs even fell within the
article's description of owners of "devalued" buildings.
Plaintiffs and defendant have also extensively and ably
argued the issue of whether defendant's statements in the article
would be protected by the First Amendment, in the event that the
statements ran afoul of Montana's libel law. The parties have
discussed the Supreme Court decisions in New York Times Co. v.
Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L Ed 2d 686, 95 ALR2d
1412; Gertz v. Welch, 418 U.S. 323, 94 S.Ct. 2997, 41 L Ed 2d 789;
and Time, Inc. v. Firestone, 424 U.S. 448, 96 S.Ct. 958, 47 L Ed 2d
154, and have argued what standard of fault this state should re-
quire a plaintiff to prove in libel actions involving a defamed
private party plaintiff and a broadcaster or publisher defendant.
This issue requires a careful balancing of the First Amendment
freedoms of speech and press, and the personal dignity interests
underlying the law of defamation. Because this case has been
settled on a nonconstitutional basis, we save for another day the
determination of whether a publisher who defames a private party
shall be liable in this state for "negligent" publishing of the
libelous statements or only for libelous statements published
with "actual malice".
The judgment of the
Chief Justice.
We concur:
Justices V