5. SAME

PRIVILEGED COMMUNICATION-BUSINESS LETTERS.

A letter written by defendant on a matter of business in which defendant was interested, and in reply to a communication from the person to whom it was addressed, is not a privileged communication, so far as relates to charges therein made derogatory to the character of third persons, which charges were not necessary to a statement of defendant's position in regard to the business to which the correspondence related.

6. SAME-ACTION FOR LIBEL-INSTRUCTION AS TO DAMAGES.

In an action to recover damages for a libel contained in a letter, the jury should be confined by the instructions, in estimating damages, to the effect of such circulation of the libel as they shall find to have been the natural consequence of the act of the defendant in sending the letter to the person to whom it was addressed.

In Error to the Circuit Court of the United States for the District of Kentucky.

George S. Steere, for plaintiff in error.

Reuben A. Miller and George W. Jolly (John Feland, of counsel), for defendants in error.

Before TAFT, LURTON, and DAY, Circuit Judges.

DAY, Circuit Judge. This cause was begun in the circuit court of the United States for the district of Kentucky by the plaintiffs, Buckner & Co., to recover damages from the defendant insurance company for alleged libel. The company, organized under the laws of the state of New Jersey, was engaged in carrying on the business of fire insurance in the state of Kentucky. Its manager was one R. H. Garrigue, whose residence was in Chicago. In 1895 Buckner & Co., it is alleged, were regularly appointed agents for the company, with full authority to solicit and write fire insurance for it in Hopkinsville, Ky., and vicinity, with the assurance and promise of defendant, through its agent, that they were to be sole agents of said company in said locality; that defendant would not write policies of insurance in that territory, except through them; and that plaintiffs were to receive commissions on all policies so written. The defendant denied that this was the contract, and claimed that its agent who made the contract notified Buckner & Co. that he had no authority to grant them the exclusive privilege of writing business at Hopkinsville, but that the company protected its agents in the matter of overhead writing. The company claimed that Garrigue, the manager, having discovered that a policy covering property at Hopkinsville had been written in New York, notified Buckner & Co. thereof, and thereupon canceled the same and returned the premium to the insured. Buckner & Co. claimed that they were entitled to a commission on this policy, the same as if written by themselves. This claim was disputed. Buckner & Co. retained $22.50 of money of the company which was in their hands. There was at this time a local board composed of the respective agents of the companies doing business in the town. This board regulated the rates of insurance in their territory. It was subordinate to the Kentucky & Tennessee Association, which association regulated the rates of the board. The local board excluded plaintiff in error because of its alleged misconduct in the matter of Buckner & Co., and imposed a fine upon Mercer & Mercer, who had

been appointed local agents of the company in the place of Buckner & Co. After considerable correspondence, a letter was written by the company in response to one from the secretary of the local board. This letter is the basis of the action, and is as follows:

"Chicago, Ill., June 6, 1896. "Mr. J. S. Moore, Secretary, Hopkinsville, Ky.-Dear Sir: We have asked our agents, Messrs. Mercer & Mercer, to return to you the inclosed voucher and this letter. In order that there may be no mistake as to the position of the Merchants' Insurance Company of Newark, beg to advise that this company will never join the Hopkinsville board, as now constituted, until full reparation has been made for the outrages committed against us by the official acts of that body. The notice of Secretary Ashbrook, of the Kentucky and Tennessee Association, that the 'disabilities imposed' against this company by your board had been removed, does not suffice. We have made our demand, and will insist upon full compliance before associating ourselves with the board again; and we desire to give notice to the Hopkinsville board that we will hold any or all of them to the full extent of the Kentucky laws, for whose protection and under which we transact our business in your state, should any attempt be made to molest our property. We do not waive any claim for damages we may have for previous actions by the board or its individual members in endeavoring to force this company from your city, neither do we make any threats as to our future course. We feel that the firm of Buckner & Co. are withholding money they collected, belonging to this company, and that the criminal laws provide for their action. We are advised that the board collected a fine from Mercer & Mercer for taking the agency of this company. We know that the board, while in session, refused to meet our representative. We know that fines were imposed against this company without notice, trial, or hearing. We are advised that such unpaid fines have been rescinded as to the company. We are advised that the collected fine against our agents has not been remitted. We know that our agency supplies were sent, by the official action of the board, to this office, without our consent, and that we were put to the expense of paying the express charges both ways on the package, as well as the additional expense of sending a representative to Hopkinsville to replace the package in the office that your board forcibly caused to surrender them. We have demanded for these outrages a full and complete apology; a remission and repayment of all fines collected or imposed for any act of this company or its representatives; the payment by Buckner & Co. of $22.50, the amount they robbed from company funds in their possession, on a false claim for commissions on business that they did not transact; and an unanimous invitation to join the board. Until the foregoing demands have been fully complied with, we positively decline to contribute one cent, or allow the name of the company on its roll of membership. Yours, truly, R. H. Garrigue, Manager."

Upon the trial, verdict and judgment were rendered in favor of Buckner & Co.

1. A preliminary question is made by the defendant in error as to the allowance of the bill of exceptions. It appears that a judgment. of $3,500 in favor of Buckner & Co. was rendered on January 28, 1898. On the same day, plaintiff in error filed a motion for a new trial, and in reference thereto the following order was made by the court:

"This day came again the parties, and defendant filed a motion for a new trial herein; and it is ordered that execution do not issue upon the judgment in this case until the further order of this court, and, on motion of defendant, it is allowed sixty days in which to tender and file a bill of exceptions herein."

The motion for a new trial was not disposed of until the following June term of the court. On the 9th day of June the court, having considered the motion of the defendant for a new trial, found the verdict of the jury in favor of the plaintiffs to be excessive, and

ordered that a new trial be granted unless the plaintiffs, by a proper writing, remit $1,500 thereof. On the same day defendant was allowed 60 days in which to file a bill of exceptions, to which order plaintiffs excepted. It is urged that, in the absence of any rule to the contrary, a bill of exceptions must be filed during the term at which the trial was had. The defendant, having failed to file the bill within the time limited, is not, it is claimed, within the rule which permits the filing thereof where the motion for a new trial has been continued to a subsequent term. The general rule as to the allowance of bills of exceptions is thus stated by Mr. Justice Gray (Bank v. Eldred, 143 U. S. 298, 12 Sup. Ct. 452, 36 L. Ed. 162):

"By the uniform course of decision, no exceptions to rulings at a trial can be considered by this court, unless they were taken at the trial, and were also embodied in a formal bill of exceptions presented to the judge at the same term. or within a further time allowed by order entered at that term, or by standing rule of court, or by consent of parties; and, save under very extraordinary circumstances, they must be allowed by the judge and filed with the clerk during the same term. After the term has expired, without the court's control over the case being reserved by standing rule or special order, and especially after a writ of error has been entered in this court, all authority of the court below to allow a bill of exceptions then first presented, or to alter or to amend a bill of exceptions already allowed and filed, is at an end. U. S. v. Breitling, 20 How. 252, 15 L. Ed. 900; Muller v. Ehlers, 91 U. S. 249, 23 L. Ed. 319; Jones v. Machine Co., 131 U. S. Append. 150, 24 L. Ed. 925; Hunnicutt v. Petyon, 102 U. S. 333, 26 L. Ed. 113; Davis v. Patrick, 122 U. S. 138, 7 Sup. Ct. 1102, 30 L. Ed. 1090; Chateaugay Ore & Iron Co., Petitioner, 128 U. S. 544, 9 Sup. Ct. 150, 32 L. Ed. 508."

In cases where a motion for a new trial is regularly filed, and not acted upon, there seems to be no necessity for a presentation of the bill, as the granting of the motion will render it entirely unnecessary so to do. It has been the practice in this circuit to permit the bill to be filed after the motion has been overruled, although such action be had at a subsequent term of court, and we see no reason to depart from this practice in this case. When the motion for a new trial was filed, it was ordered that defendant be granted "sixty days in which to tender and file a bill of exceptions," but the purpose of the court to reserve control of the judgment until the motion for a new trial should be acted upon is shown in the order withholding execution until further order of the court. At the June term, when the court passed upon the motion, a further time of 60 days was granted to the plaintiff in error within which to file a bill of exceptions. The bill was presented within this time, and we are of the opinion that it was in time, and properly allowed. 2. Did the court err in overruling the demurrer to the amended petition? This pleading sets forth, in substance, that during the year 1895 the plaintiffs were co-partners engaged in carrying on business as agents for various fire insurance companies in Hopkinsville, Ky.; that defendant, the Merchants' Insurance Company of Newark, N. J., was during said year, and prior thereto, an insurance company chartered to transact business in the United States, and to sue and be sued as such corporation; that the home office of said company was at Newark, N. J., with a branch office in Chicago, from which it carried on business in the Southern and

Western states, under the control and management of R. H. Garrigue, the duly-authorized manager of the company. The plaintiffs aver that in March, 1895, they were the duly-appointed agents of said company, with authority to solicit and write policies of fire insurance in the city of Hopkinsville, Ky., and vicinity. Plaintiffs allege the promise of the defendant that they were to be the sole agents of the company in said locality; that said company would not write policies of insurance in their territory, except through the agency of the plaintiffs; that it would not cut rates in said locality, but that rates should be fixed and uniform; plaintiffs to receive a commission of 15 per cent. on all business done for defendant in said locality or territory. It is further stated that many other fire insurance companies were doing business in the city of Hopkinsville; that the agents of said companies, including plaintiffs, were organized, with the knowledge and consent of their respective companies, as a local board, to regulate and render uniform the business of fire insurance in said locality, with certain rules and regulations for the transaction of business; that one Jack S. Moore was secretary of said local board. They further state that in the year 1895, while plaintiffs were acting as the authorized agents of defendant in the city of Hopkinsville, Ky., said company, without plaintiffs' knowledge or consent, wrote and delivered a policy on the Hotel Latham, in said city, at a less rate than the regular charges the plaintiffs were authorized to charge for said insurance, and less than the regular rates charged, which was in bad faith, and violation of the promise and assurance of the defendant to the plaintiffs, and of the custom of insurance agents in that locality; that some time thereafter the plaintiffs ascertained said facts, whereupon they insisted upon said defendant's paying them the commission, and notified the company that they would claim $22.50, the regular commission on the premium which should have been paid on said policy, which commission defendant refused to allow, wherefore plaintiffs, in settlement with defendant, retained $22.50 from defendant's money, which retention was the result of considerable correspondence between plaintiffs and defendant, resulting in no agreement as to plaintiffs' right to retain said money; that said local board of underwriters imposed certain "disabilities" upon defendant on account of the cutting of rates in that locality without the knowledge of said agents, and without allowing its agents the regular commission on said business; that said board also imposed a fine upon Mercer & Mercer for taking the agency after the action of the company had been condemned; that R. H. Garrigue, defendant's authorized and acting manager, in the regular course of his official business wrote a letter, dated Chicago, Ill., June 6, 1896, directed to Jack S. Moore, secretary, which letter was mailed to him, and duly received by him, at Hopkinsville, Ky.; that said letter contained remonstrances against said local board, and set forth various grievances against said board; that said letter contained the following false, malicious, and libelous statements of and concerning the plaintiffs, namely, "We feel that the firm of Buckner & Co. are withholding money collected for and belonging to this company,

and

that the criminal laws provide for their action,"-thereby meaning falsely and maliciously to charge the plaintiffs with a violation of the criminal laws of Kentucky. It is further stated in said letter: "We have demanded for these outrages a full and complete apology; a remission and payment of all fines collected or imposed for any act of this company or its representatives; the payment by Buckner & Co. of $22.50, the amount they robbed of company funds in their possession, on a false claim for commissions on business they did not transact; and an unanimous invitation to join the board," -meaning thereby to charge the plaintiffs with the offense of robbing, and with dishonest and criminal conduct. A copy of the letter is attached. Plaintiffs further aver: That they were the successors to Buckner & Hays, former agents of defendant, and assumed all liabilities of said firm, and were entitled to all uncollected fees and commissions due said firm. That prior to said letter plaintiffs were esteemed as good and honest men, and reliable insurance agents. The chief officers of said company, by authority of said company, falsely and maliciously wrote of and published of and concerning plaintiffs the false and libelous statements contained in said letter. Said letter was received by said Moore, and its contents were made known and published by said Moore, as was intended by said defendant, in the city of Hopkinsville, whereby they were greatly mortified and damaged in the sum of $25,000. Defendant caused proceedings to be entered against plaintiffs for the recovery of said sum of $22.50, and the court found for plaintiffs. The petition concludes with prayer for judgment.

In the consideration of this assignment of error, it must be remembered that this is an action for libel, not for slander, and that entirely different rules apply to the two classes of actions. It may be admitted to be the rule in slander, where the words are merely spoken, that, to be actionable, in the absence of special damage, the utterances complained of must, in cases like the present, impute to the complainant the commission of a criminal offense. The rule is different in actions for libel. In State v. Smiley, 37 Ohio St. 30, Chief Justice Boynton, in discussing the difference between the rules applicable to words spoken, which constitute slander, and written defamation, which constitutes libel, cites the cases and states the general rule upon the subject in the following language:

"In Watson v. Trask, 6 Ohio, 531, it was said that 'a libel in reference to individual injury may be defined to be a false and malicious publication against an individual, either in print or writing, or by pictures, with intent to injure his reputation, and to expose him to public hatred, contempt, or ridicule.' Words of ridicule only, or of contempt, which merely tend to lessen a man in public esteem or to wound his feelings, will support a suit for libel, because of their being embodied in a more permanent and enduring form, of the increased deliberation and malignity of their publication, and of their tendency to provoke breaches of the public peace. In Tappan v. Wilson, 7 Ohio, 190, it was further said that if the 'tendency of the publication,' being malicious, 'is to degrade and lessen the standing' of the person concerning whom the publication is made, it is a libel. The general current of authority is to the same effect; holding that although the matter published might not, without averment and proof of special damage, be actionable if only spoken, yet, if published, and it be of a character which, if believed, would naturally tend to expose the person