Gallagher v. Johnson

No. 14891
IN THE SUPREME COURT OF THE STATE OF MONTANA
1980

EDWARD J. GALLAGHER,
Plaintiff and Appellant,
VS.

CHARLES G. JOHNSON,
Defendant and Respondent.

Appeal from: District Court of the Third Judicial District,
Honorable Gordon R. Bennett, Judge presiding.
Counsel of Record:
For Appellant:

Knight, Dahood, Mackay & McLean, Anaconda, Montana
Wade Dahood argued, Anaconda, Montana
For Respondent:
Gough, Shanahan, Johnson & Waterman, Helena, Montana
Ronald Waterman argued, Helena, Montana
Michael J McKeon, Anaconda, Montana

Submitted: February 27, 1980
Decided: @ $ +2 1 18
34
',h
Filed: .! + - , 5.4Q
Mr. Justice Gene B. Daly delivered the Opinion of the Court.
The plaintiff-appellant, a public officer, filed a
complaint in libel on June 2, 1978, in the District Court of

the Third Judicial District, in and for the County of Deer
Lodge. A motion to dismiss was filed by respondent on June
16, 1978. After submission of briefs on the motion the

District Court denied the motion to dismiss and ordered ap-
pellant to file an amended complaint. Appellant filed his
amended complaint o l December 19, 1978.
i A motion to dismiss
the amended complaint was filed by respondent on January 2,
1979. The matter was briefed, argued and the court granted
respondent's motion to dismiss.
The decision of the District Court rested on legal
questions only and at the pleading stage few facts were
developed. Some background information is found in the
record.
Appellant is a resident and native of Anaconda, Mon-
tana. Since 1970 he has been the Director of the Urban
Development Agency for the City of Anaconda, agreed to be a
public office.
Until his death, respondent also resided in Anaconda
and was a self-employed businessman. Respondent was ap-
parently well known for his outspoken views and criticism of
the management of civic affairs in the City of Anaconda and
Deer Lodge County. One way he expressed those views was to

buy advertising space in the local newspapers where he would
set forth his positions on a wide range of subjects.

The difficulties leading to this case arose when respon-
dent began questioning actions of the Urban Renewal Develop-
ment Agency personally and in his advertisements.
 A p p e l l a n t a l l e g e d i n h i s amended c o m p l a i n t t h a t h e was

a p u b l i c o f f i c e r and t h a t r e s p o n d e n t had made s t a t e m e n t s
which w e r e f a l s e , d e f a m a t o r y and c i r c u l a t e d w i t h t h e i n t e n t

t o a f f e c t t h e good name, r e p u t a t i o n and o c c u p a t i o n of a p p e l -
lant. H e i d e n t i f i e d n i n e s e p a r a t e i n s t a n c e s where s t a t e -

ments w e r e made which h e c o n s i d e r e d t o b e l i b e l o u s .

I n i t s order dismissing the cause t h e D i s t r i c t Court

found t h a t a number of t h e a l l e g e d l i b e l o u s p a r a g r a p h s were

t o o vague t o c o n s t i t u t e l i b e l p e r se and t h a t t h e r e w a s some

q u e s t i o n whether t h e words s e t f o r t h c o n s t i t u t e d l i b e l by

i n f e r e n c e ( p e r quod). The c o n c l u s i o n r e a c h e d by t h e D i s -

t r i c t C o u r t was t h a t e a c h s t a t e m e n t , c o n s t r u e d i n t h e l i g h t
most f a v o r a b l e t o a p p e l l a n t , c o n s t i t u t e d l i b e l p e r quod, i f

t h e statements w e r e libelous a t a l l . S i n c e no s p e c i f i c

damages were a l l e g e d i n t h e c o m p l a i n t , t h e D i s t r i c t C o u r t

concluded no c a u s e of a c t i o n had been s t a t e d and t h e com-

p l a i n t w a s dismissed.

A p p e l l a n t b r i n g s t h i s a p p e a l from t h e judgment of

dismissal.

The i s s u e s p r e s e n t e d f o r r e v i e w by t h i s C o u r t c o n c e r n

whether t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g t h e motion f o r

d i s m i s s a l and, more s p e c i f i c a l l y :

1. Whether a p u b l i c o f f i c i a l s e e k i n g t o r e c o v e r f o r

a l l e g e d l i b e l o u s o r s l a n d e r o u s s t a t e m e n t s must p l e a d s p e c i a l

damages s p e c i f i c a l l y beyond good name, r e p u t a t i o n , and occu-

pation, etc., i f t h e s t a t e m e n t s a r e l i b e l p e r quod and n o t

s u s c e p t i b l e of d o l l a r and c e n t s p r o o f .

2. Whether a c t u a l m a l i c e must be s p e c i f i c a l l y p l e a d e d

t o s a t i s f y t h e r e q u i r e m e n t s o f t h e F i r s t Amendment o f t h e

United S t a t e s C o n s t i t u t i o n .
 Appellant' s contentions are :
1. Respondent's publications have been injurious to
the person and occupation of the appellant and the complaint
in its entirety sets out a sufficient claim of injury by
defamation to warrant a jury trial to determine what remedy
is appropriate.
2. Statements by the respondent set forth in paragraph
IV (1) and (2) of the amended complaint constitute slander
within section 27-1-803, MCA, and reference to Montana case
law shows that this slander, if written, would constitute
libel per se. Manley v. Harer (1925), 73 Mont. 253, 235 P.
757; Burr v. Winnett Times Pub. Co. (1927), 80 Mont. 70, 258
P. 242.
3. Paragraph V of appellant's amended complaint,
alleging that respondent intended by his statement and
publications to have the people of Deer Lodge County believe
that appellant was dishonest, acted illegally and had been
violating the law, was sufficient in this era of notice
pleading to plead special damage by way of injury to appel-
lant's occupation. As a public official whose effectiveness

relies solely upon the public's confidence in his actions
and intentions, appellant's damage cannot be measured in
terms of lost contracts or personal business opportunities.
Appellant, therefore, sufficiently pleaded special damages
resulting from injury to him in his occupation to allow this
cause to go before a jury.
4. Appellant in part V of his amended complaint al-

leged that respondent "knew that said words were untrue and
in preparing, composing, and causing to be circulated said

defamatory words . . . acted with specific malice . . ."
The clear weight of authority has been found to show that
this allegation is sufficient to state the actual malice
standard required by New York Times Co. v. Sullivan (1964),
376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686.
5. The pleadings set forth by appellant in his amended
complaint not only conform to the standards set in New York
--
Times but also fulfill the requirements of Rule 9(b) M.R.Civ.P.
Respondent relies mainly on the argument that in Montana
specific damages must be pleaded and proven to support a
claim for libel per quod. Special damages must not only be
suggested in the complaint but the facts constituting spe-
cial damages "must be alleged or no cause of action is
stated." Lernrner v. The "Tribune" (1915), 50 Mont. 559, 148
P. 338. Second, respondent contends the failure to allege
the facts which constituted actual malice also warranted
dismissal of the action. Regarding public officials, the
First Amendment requires that before recovery for libel, the
plaintiff must plead and prove the publication was false and
was made with actual malice. --
New York Times, 376 U.S. at
279-80, 84 S.Ct. at 726, 11 L.Ed.2d at 706.
In Montana 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
obloguy or which causes him to be shunned or
avoided or which has a tendency to injure him
in his occupation." Section 27-1-802, MCA.
Slander is defined as:
". . .a false and unprivileged publication other
than libel which:
"(1) charges any person with crime or with having
been indicted, convicted, or punished for crime;
"(2) imputes in him the present existence of an
infectious, contagious, or loathsome disease;
 "(3) 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 pecu-
liarly requires or by imputing something with refer-
ence to his office, profession, trade or business
that has a natural tendency to lessen its profit;

"(4) imputes to him impotence or want of chastity;
or

"(5) by natural consequence causes actual damage."
Section 27-1-803, MCA.
The District Court in its memorandum presented a condensa-
tion of the case law on libel and slander in Montana which
it used as a standard for judgment of this complaint, stat-
ing:
"For some reason, enshrouded by the mists of time
and accretions of common law and the Field Code,
a formal distinction is made in our code between
libel and slander. (MCA 27-1-802 and 803.) Both
are false and unprivileged publications which cause
injury by defamation (including, specifically, the
imputation of impotency in the case of slander).
Beyond that, they are superficially different, but
the differences are insignificant here. ... 'Words
are defamatory per se which upon their face and
without the aid of extrinsic proof are injurious to
the person concerning whom they are spoken.' Manley
v. Harer, 73 M 258. They must be susceptible of
but one meaning (Brown v. Independent Publishing Co.,
48 M 380), and that an opprobrious one. (Burr v.
Winnett Times, 80 M 75). If the words are not de-
famatory - - they cannot be made so by innuendo.
per se
. .. To determine whether the words constitute libel
per se they must be construed in relation to the
entire publication, which must in turn be viewed as
a stranger might look at it, without the knowledge
possessed by the parties concerned (Brown, supra, pg.
380). Their injurious character must be a fact of
such common notoriety as to be established by the
general consent of men so that the court takes
judicial notice (Griffin v. Opinion Publishing Co.,
114 M 508). In a word, the insult must be obvious.
"Generally, if the words are defamatory per
se, damage is presumed and general damages
may be recovered without allegation or proof
of special damages (Paxton v. Wocdward, 31 M
209). See discussion of exception that must
be made in the case of alleged libel of public
official, below. If the words are - defamatory
not
per- facts must be pleaded which show the words
- se
are libelous and special damages must be specially
pleaded, according to all the Montana cases from
 L e d l i e v . Wallen (1895) 1 7 M 155 t o S t e f f e s v .
Crawford (1963) 1 4 3 M 47. A c o m p l a i n t based on
L
-- f d e f aem aailo n f a i l s a o e s n a t ea al e g e d e (of r i f f i n ,
p e r quod
action i sp ci
t
damages r
t t
ot l
caus
G
s u p r a , 5 0 8 ) . F a c t s must be p l e a d e d which show t h e
c h a r a c t e r and e x t e n t of t h e i n j u r y (Manley v .
Harer, 73 M 2 5 9 ) . I t i s n o t enough, a c c o r d i n g t o
t h e Montana c a s e s , t o a v e r g e n e r a l l y t h a t i n con-
sequence o f t h e p u b l i c a t i o n t h e p l a i n t i f f h a s been
damaged i n h i s b u s i n e s s . The f a c t s showing s u c h
damages must be a l l e g e d o r no c a u s e of a c t i o n i s
s t a t e d (Lemmer v . The " T r i b u n e " , 50 M 5 6 5 ) . While
t h e r e a r e no r e p o r t e d Montana cases on t h e s u b j e c t ,
t h e r e seems t o be no r e a s o n why t h i s s t a t e would
n o t f o l l o w t h e s e v e r a l s t a t e s , a p p a r e n t l y t h e un-
q u e s t i o n e d m a i o r i t v . which f i n d i n s u f f i c i e n t a
c o m p l a i n t based on p e r quod d e f a m a t i o n r e s u l t i n g
1
s t a t e s p e c i a l p e c u n i a r y l o s s f o r which r e c o v e r y i s
s o u g h t . These s t a t e s r e q u i r e a l l e g a t i o n s a s t o
p a r t i c u l a r c o n t r a c t s , s a l e s , employments, e t c . ,
l o s t bv r e a s o n o f t h e d e f a m a t i o n . See 53 CJS 272.
Libel S l a n d e r , S e c t i o n 170 ( d ) and 50 Am J u r 2d'
945, L i b e l & S l a n d e r , S e c t i o n 420. I g a t h e r from
a check on some of t h e cases c i t e d under t h e s e
s e c t i o n s t h a t r e l a x a t i o n of s p e c i f i c i t y r e q u i r e -
ments under modern p l e a d i n g p r a c t i c e h a s n o t d i s -
cernably a l t e r e d t h i s requirement. A s noted, I
would a p p l y a l l o f t h e above p r i n c i p l e s w i t h o u t
d i s c r i m i n a t i n g between l i b e l and s l a n d e r p l e a d -
ings." (Emphasis a d d e d . )

With t h e above ground r u l e s i n mind, t h e D i s t r i c t C o u r t

engaged i n a paragraph-by-paragraph d i s c u s s i o n of t h e amended

c o m p l a i n t and concluded t h a t " a l l of t h e s t a t e m e n t s s e t

f o r t h i n t h e s e p a r a t e p a r a g r a p h s of a l l e g a t i o n # I V , t o g e t h e r

-
with t h e i r associated allegations, constitute l i b e l per

----
quod, i f t h e y a r e l i b e l o u s - -l , and must f a i l f o r l a c k
a t al

- a l l e g a t i o n - s p e c i f i c damages."
of of (Emphasis s u p p l i e d . )

The D i s t r i c t C o u r t f u r t h e r concluded t h a t even i f a l l

t h e s t a t e m e n t s w e r e c l e a r l y l i b e l p e r se, t h e c o m p l a i n t

would f a l l s h o r t of s t a t i n g a c a u s e of a c t i o n b e c a u s e no

s p e c i f i c f a c t s were a l l e g e d t o s u p p o r t t h e m a l i c e a l l e g a -

tion.

F o r some r e a s o n , which i s a l s o enshrouded by t h e m i s t s

of v e r y r e c e n t t i m e , none of t h e p a r t i e s p r e s e n t e d f o r con-

s i d e r a t i o n t o t h e D i s t r i c t C o u r t t h e most r e c e n t case on
this subject, Madison v. Yunker (1978), Mont. 589
P.2d 126, 35 St.Rep. 1311, where this Court stated:
"Finally, in Gertz v. Robert Welch, Inc., supra,
the Supreme Court, while allowing states to pro-
vide for libel suits, erected a fence around the
amount of damages recoverable:
"'We would not, of course, invalidate state law
simply because we doubt its wisdom, but here we
are attempting to reconcile state law with a
competing interest grounded in the constitutional
command of the First Amendment. It is therefore
appropriate to require that state remedies for
defamatory falsehood reach no farther than is
necessary to protect the legitimate interest
involved. It is necessary to restrict defamation
plaintiffs who do not prove knowledge of falsity
or reckless disregard for the truth to compensa-
tion for actual injury. We need not define "ac-
tual injury," as trial courts have wide experi-
ence in framing appropriate jury instructions in
tort actions. Suffice it to say that actual in-
jury is not limited to out-of-pocket loss. Indeed,
the more customary types of actual harm inflicted
by defamatory falsehood include impairment of
reputation and standing in the community, per-
sonal humiliation, and mental anguish and suffer-
ing. Of course, juries must be limited by ap-
propriate instructions, and all awards must be
supported by competent evidence concernins the
injury, although there - - -no evidence which
need be
assigns - actual dollar value - - injury.
an to the
"'We also find no justification for allowing
awards of punitive damages against publishers
and broadcasters held liable under state-defined
standards of liability for defamation. In most
jurisdictions jury discretion over the amounts
awarded is limited only by the gentle rule that
they not be excessive. Consequently, juries
assess punitive damages in wholly unpredictable
amo~~ntsbearing no necessary relation to the
actual harm caused. And they remain free to
use their discretion selectively to punish ex-
pressions of unpopular views. Like the doctrine
of presumed damages, jury discretion to award
punitive damages unnecessarily exacerbates the
danger of media self-censorship, but, unlike the
former rule, punitive damages are wholly irrele-
vant to the state interest that justifies a
negligence standard for private defamation ac-
tions. They are not compensation for injury.
Instead, they are private fines levied by civil
juries to punish reprehensible conduct and to
deter its future occurrence. In short, the pri-
vate defamation plaintiff who establishes lia-
bility under a less demanding standard than
that stated by New York Times may recover only
---
such damages as are sufficient to compensate him
for actual injury.' 418 U.S. at 349, 350, 94
S.Ct. at 3012.
 " I n t h i s c a s e , d e f e n d a n t s have c o n s t a n t l y re-
f e r r e d t o Madison a s a ' p u b l i c o f f i c i a l t , ap-
p a r e n t l y t o b r i n g t h i s c a s e under t h e u m b r e l l a
of N e w York T i m e s Co. v . S u l l i v a n , s u p r a . W e
a r e s k e p t i c a l t h a t t h e d i r e c t o r of t h e p r i n t
shop a t t h e U n i v e r s i t y of Montana, M i s s o u l a ,
Montana, i s i n d e e d a ' p u b l i c o f f i c i a l ' . In
G e r t z v . R o b e r t Welch, I n c . , s u p r a , i t w a s h e l d
t h a t a lawyer w a s n o t a p u b l i c o f f i c i a l , a l t h o u g h
h e had t a k e n on a prominent c a s e and was by v i r -
"ue of h i s p r o f e s s i o n a n o f f i c e r o f t h e c o u r t .
Likewise, i t may be contended i n t h e r e t r i a l t h a t
Madison i s a ' p u b l i c f i g u r e ' . Whatever h i s
s t a t u s , - -i- a g u e s t i o n - - j u r y t o d e t e r -
it s for the
mine, b e c a u s e - - c o n s t i t u t i o n a l p r o v i s i o n
of t h e
that -
- - t h e ----- s t r u c t i o n s of t h e c o u r t
under t h e i n
i s -e j u d g e - - t h l- -
- th o f b o - a w and f a c t . A r t i c l e 11,
S e c t i o n 7 , 1972 Montana C o n s t i t u t i o n . With- - z-
p r o p r i a t 6 i n s t r u c t i o n s , t h e j u r y can d e t e r m i n e
t h e s e m a t t e r s and t h e i r s t a t u s i n any t r i a l , - un-
l e s s otherwise stipulated.

"In t h i s case, therefore, applying t h e r a t i o n a l e
of t h e c a s e s of t h e United S t a t e s Supreme C o u r t
on damages f o r l i b e l , i f Madison i s c o n s i d e r e d
t o be a p r i v a t e p e r s o n , he must prove: (1) t h a t
t h e p u b l i s h e d m a t e r i a l w a s f a l s e ; ( 2 ) t h a t de-
fendants a r e chargeable with f a u l t i n t h e publi-
c a t i o n ; and ( 3 ) t h a t a c t u a l i n j u r y t o him e n s u e d ,
f o r which he may r e c o v e r h i s a c t u a l damages.
Moreover, ( 4 ) i f h e p r o v e s t h a t t h e p u b l i c a t i o n
was made by d e f e n d a n t s w i t h knowledge of i t s
f a l s i t y or i n reckless disregard for the truth
o r f a l s i t i e s t h e r e o f , h e may r e c o v e r p u n i t i v e
damages f o r s u c h m a l i c e , b u t s u c h m a l i c e d o e s
not include hatred, personal s p i t e , i l l - w i l l o r
a desire t o injure. N e w York T i m e s Co. v . S u l -
l i v a n , s u p r a ; L e t t e r C a r r i e r s v. A u s t i n ( 1 9 7 4 ) ,
418 U.S. 264, 94 S.Ct. 2 7 7 0 , 4 1 L.Ed.2d 745.

" I f Madison i s a p u b l i c o f f i c i a l o r p u b l i c
f i g u r e , he m a y r e c o v e r o n l y - - p r o v e s t h e
i f he
t h r e s h h o l d --- e p u b l i c a t i o n w a s -
fact that th - made
w i t h knowledge - - f a l s i t y o r r e c k l e s s d i s -
of i t s
regard - - t r u t h o r f a l s i t y . H e could then
for its
r e c o v e r h i s a c t u a l a n d p u n i t i v e damages." (Em-
p h a s i s added.) 589 P.2d a t 132-33.

Madison h a s a d e q u a t e l y s t a t e d Montana's p o s i t i o n on t h e

two l e g a l problems p r e s e n t e d h e r e . W e have a d o p t e d t h e

p o s i t i o n o f New York T i m e s v. S u l l i v a n , s u p r a .

S i n c e New York Times was d e c i d e d by t h e U n i t e d S t a t e s
--
Supreme C o u r t i n 1964, a d e f e n d a n t i n a l i b e l a c t i o n h a s

been a c c o r d e d a n a d d i t i o n a l F i r s t Amendmerlt p r o t e c t i o n i n

t h e making of d e f a m a t o r y s t a t e m e n t s c o n c e r n i n g p u b l i c o f f i -
cials. Unless he made them with "malice," that is to say
that unless he knows the statements to be false, or makes
them with reckless disregard for the truth, or in fact
entertained serious doubts about their truth, or had a high
degree of awareness of their probable falsity, he will not
be held liable in a libel action. Such malice does not
include hatred, personal spite, ill will, or desire to
injure.
The District Court here, in following -- Times
New York
and its progeny, correctly held that it is incumbent upon
appellant here to prove actual malice if he is a public
official. He went one step farther,,i1(3wever,and ruled that
appellant also had to plead the facts to support the conclu-
sion that the defamation was knowingly and/or recklessly
published. In his memorandum, the District Court gave the
following rationale for the above ruling:
"The working principle I would rely on was stated
by the Idaho Supreme Court before the Sullivan
case. Gough v. Tribune-Journal Company, 1954,
275 P2d 663, 667, 668."
New York Times v. Sullivan, supra, does not require the
additional pleading of the supportive fact, nor does Montana.
See, Madison v. Yunker, supra; Rule 9, M.R.Civ.P. There-
fore, the additional requirement is in error.
On the second issue concerned with the pleading of spe-
cial damages under the circumstances of this case, this
Court had never specifically ruled on the matter before
Madison. It has been well cared for in that opinion.
On the matters before this Court, we find appellant has
met the proper standard of pleading his cause.
Therefore, the judgment and order of dismissal of
plaintiff-appellant's complaint by the District Court is
 r e v e r s e d , and t h e c a u s e remanded t o t h e D i s t r i c t C o u r t f o r

f u r t h e r proceedings, consonant with t h i s opinion. Costs t o

appellant.

!u22
4
Justice

W e concur:

%A&*%-&
Chief J u s t i c e

-
-
u&--Q /
/

, -
M+ Justice

Mr. J u s t i c e D a n i e l J. Shea d i s s e n t s , and w i l l f i l e a w r i t t e n
d i s s e n t later.