Before MEDINA, FRIENDLY and SMITH, Circuit Judges.
In this action by Paul J. Kern against various corporate and individual defendants to recover damages for alleged libel and slander summary judgment has been granted by the District Court dismissing the amended complaint against defendants Chase Manhattan Bank, Samuel P. Mason, Western Pacific Railroad Company, and A. J. Hettinger, Jr. A similar motion by defendant Chemical Corn Exchange Bank was denied and the ruling thus made is not before us for review. Plaintiff's appeal is authorized by an order of Judge Murphy, pursuant to the provisions of Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S.C. The opinion below is not reported. Jurisdiction of the District Court for the Southern District of New York is based upon diversity of citizenship.
We shall separately consider the rulings in favor of Chase Manhattan Bank and Mason, on the one hand, and in favor of Western Pacific and Hettinger, on the other, as wholly distinct principles of law are involved in each. It was held that before the commencement of the action against the Chase Manhattan Bank and Mason the one-year Statute of Limitations of either New York or California*fn1 had run. The dismissal against Western Pacific and Hettinger was based upon res adjudicata with respect to Western Pacific and collateral estoppel with respect to Hettinger, by reason of the prior dismissal of an action against them by Kern based upon the same alleged wrong, in the United States District Court for the Northern District of California, in which action Hettinger had neither been served with process nor had he made any general appearance by counsel. While we affirm the judgment in favor of Western Pacific, we find it necessary otherwise to reverse both judgments appealed from for reasons stated below.
As is so often the case, the basic issues are quite simple and they have been obscured by numerous motions and crossmotions, charges and countercharges of one kind and another. It will suffice to say that voluminous affidavits were considered in support of the motions for summary judgment and in opposition thereto, and that, despite prior rulings by other judges, the motions were properly before the Court below.
A few preliminary observations will clear away some of the brushwood. The action is based upon an alleged defamatory report on Kern sent by the Chemical Corn Exchange Bank to the Chase Manhattan Bank and forwarded, pursuant to a request for information, to Western Pacific. It is alleged that the following excerpt from the written report thus forwarded, part of Exhibit A annexed to the amended complaint, falsely charged Kern with activities of a communistic flavor, particularly the statement that "he was active in the Communist organization":
"BRANCH OF NEIGHBORING BANK REPRESENTATIVE:
"I have known Mr. Kern for about a year and a half. He has been in to see us several times and our relations have been very cordial. He maintains some very nice accounts with us as Mr. Kennedy may have mentioned. I believe Mr. Kern to be a very friendly man and he always makes a good appearance. He is a tall man, I would say about 6foot3inch, dresses very well. He is a family man and I consider him to be very stable.
"Personally I believe that he would be useful in an executive capacity. He is a good lawyer and from what I can see a competent business man. Our record show that he was a member of Communist front organizations, but I am inclined to think that he was more of a misguided liberal. He has since changed his view on the Communist party. One of his clients is a large record company, which is a depositor of ours. Their head office is Chicago and when we have difficulties, I have called on Mr. Kern to straighten them out. He has been very helpful to us in this matter. Although I feel he would be and [sic] asset to a company, that company should consider his past record. Otherwise, I do not believe there is any danger of his political views being what they were, but the very fact that he was active in the Communist organization would be bad for publicity." (Italics omitted.)
There is no substance to the alleged "libel of credit"*fn2 and this was properly dismissed. As we conclude that the Statute of Limitations had not necessarily run prior to the commencement of the action, the allegations relative to concealment and conspiracy have no relevancy to the issues now before us and they may be disregarded. Moreover, it was sufficiently developed on the oral argument before us that the so-called "second report," sent by Chase Manhattan around September 27, 1957, contained nothing that could be considered defamatory. Nor is reliance thereon now asserted by Kern. It merely served to add another element of confusion to the case.
The gist of the claim is that Kern desired to be elected as a director of Western Pacific, that the president of Western Pacific "advised" Kern that he would recommend his election as a director when Kern's holdings of the stock of Western Pacific reached 5000 shares, that he subsequently became the owner of stock in that amount, and so informed the president, who thereupon "indicated" that he would present Kern's name for election at the directors' meeting on October 3, 1957. It is further alleged that information was sought relative to Kern's suitability as a director, and the written report, a portion of which we have already quoted, was forwarded and considered. This allegedly false and defamatory statement is alleged to have prevented Kern's election as a director and to have damaged his reputation in the sum of $500,000.00.
The various defenses set forth in the answers or amended answers include the assertion that the report was in all respects true, that the one-year Statute of Limitations had run prior to the commencement of the action, and that the report was prepared and sent or used in good faith and without malice and was, under the circumstances, privileged.
Further details will appear as they be come relevant to the discussion ...