Passaic Print Works v. Ely & Walker Dry Goods Company United States Circuit Court of Appeals, Eighth Circuit, November 14, 1900. Reported in 44 U. S. Circuit Court of Appeals Reports, 426 , S. C. 105

In U. S. Circuit Court of Appeals, Eighth Circuit. Before Caldwell, Sanborn, and Thayer, Circuit Judges.

In error to U. S. Circuit Court for Eastern District of Missouri.

This case was determined below on a demurrer to the plaintiff’s petition, which was sustained; and a final judgment was entered against the Passaic Print Works, the plaintiff below, it having declined to plead further.

The plaintiff’s petition contained, in substance, the following allegations (inter alia):—

Plaintiff is a corporation engaged in the manufacture of prints or calicoes which it sells to jobbers or wholesale dealers in St. Louis and elsewhere, who in turn sell the same to the retail trade. In 1899 it had fixed on certain prices for certain specified brands of calicoes; and it had, prior to Feb. 25, 1899, received from several wholesale dealers in St. Louis orders for large amounts of said brands at the prices specified. On February 25, 1899, the defendant company, combining and conspiring among themselves and with others to the plaintiff unknown, and maliciously intending to injure the business of the said plaintiff, and to cause it great loss in money, and to break up and ruin the plaintiff’s trade among the jobbers in St. Louis, maliciously caused a circular, in the name of the said defendant corporation, to be issued and sent out to the retail trade tributary to St. Louis. In the circular defendant company offered for sale several brands of calicoes manufactured by plaintiff at prices lower than those fixed by plaintiff. The brands were offered “as long as they last” at these reduced prices: “Prices for all items subject to change without notice, and orders accepted only for stock on hand.” Plaintiff further alleged that it was informed and believed that defendant had but a small quantity of such goods to sell, and for that reason qualified its offer as above stated.

The petition further averred, that the effect of issuing this circular was to compel jobbers to whom plaintiff had already sold either to cancel their orders or to compel plaintiff to make a rebate on price, and to thereby break up the trade of plaintiff in St. Louis and the adjacent country, and to make the other jobbers in St. Louis afraid to deal in said brands except at greatly reduced prices and then in comparatively small quantities; and upon information and belief the plaintiff alleged “that the quotations of this plaintiff’s said goods in the said circular were made by the said defendants with the end and object in this paragraph stated, and not for any legitimate trade purpose.”

Thayer, Circuit Judge, [after stating the case] delivered the opinion of the court.

The complaint filed in the lower court, the substance of which has been stated, shows by necessary intendment that when the circular of the defendant company was issued it had in stock a limited quantity of the four brands of calico of the plaintiff’s manufacture which are therein described. The circular stated, in substance, that the defendant had such calicoes in stock, and the complaint did not deny that fact, but admitted it by averring that “the defendant corporation had but a small quantity of such goods to sell, and for that reason qualified its offer to sell by inserting in the circular after the name of the goods the words ‘as long as they last.’” Moreover, the owner of property, real or personal, has an undoubted right to sell it and to offer it for sale at whatever price he deems proper, although the effect of such offer may be to depreciate the market value of the commodity which he thus offers, and incidentally to occasion loss to third parties who have the same kind or species of property for sale. The right to offer property for sale, and to fix the price at which it may be bought, is incident to the ownership of property, and the loss which a third party sustains in consequence of the exercise of that right is damnum absque injuria. We are thus confronted with the inquiry whether the motive which influenced the defendant company to offer for sale such calicoes of the plaintiff’s manufacture as they had in stock at the price named in its circular, conceding such motive to have been as alleged in the complaint, changed the complexion of the act, and rendered the same unlawful, when, but for the motive of the actor, it would have been clearly lawful. It is common learning that a bad motive—such as an intent to hinder, delay, and defraud creditors, by virtue of St. 13 Eliz. c. 5, and possibly by the rules of the common law—will render a conveyance or transfer of property void which, but for the bad motive, would have been valid. So, also, one who sets the machinery of the law in motion without probable cause, and for the sole purpose of injuring the reputation of another, or subjecting him to loss and expense, is guilty of an unlawful act which would have been lawful but for the improper motive. And one who, by virtue of his situation, has a qualified privilege to make defamatory statements concerning another, may be deprived of the benefit of that privilege by proof that it was not exercised in good faith, but in pursuance of a malicious intent to injure the person concerning whom the defamatory statement or statements were made. Poll. Torts (Webb’s Ed.) pp. 331–335, and cases there cited. There is also some authority for saying that one who maliciously (that is, with intent to obtain some personal benefit at another’s loss or expense) induces another to break his contract with a third party thereby commits an actionable wrong if special damage is disclosed, although the act done would have been lawful if the wrongful motive had been absent. Lumley v. Gye, 2 El. & Bl. 216; Bowen v. Hall, 6 Q. B. Div. 333; Walker v. Cronin, 107 Mass. 555. And see Poll. Torts (Webb’s Ed.) pp. 668–673. Aside from cases of the latter kind, it is a general rule that the bad motive which inspires an act will not change its complexion, and render it unlawful, if otherwise the act was done in the exercise of an undoubted right. Or, as has sometimes been said, “when an act done is, apart from the feelings which prompted it, legal, the civil law ought to take no cognizance of its motive.” The question as to how far and under what circumstances a bad purpose will render an act actionable which, considered by itself, and without reference to the purpose which prompted it, is lawful, has been so much discussed since the decision in Allen v. Flood, [1898] 1 App. Cas. 1, that it would be profitless to indulge in further comment. It has been well observed that it would be dangerous to the peace of society to admit the doctrine that any lawful act can be transformed prima facie into an actionable wrong by a simple allegation that the act was inspired by malice or ill will, or by an improper motive. It is wiser, therefore, to exclude any inquiry into the motives of men when their actions are lawful, except in those cases where it is well established that malice is an essential ingredient of the cause of action, or in those cases where, the act done being wrongful, proof of a bad motive will serve to exaggerate the damages.

The case at bar falls within neither of the exceptions to the general rule above stated,—that, if an act is done in the exercise of an undoubted right, and is lawful, the motive of the actor is immaterial. No one can dispute the right of the defendant company to offer for sale goods that it owned and were in its possession, whether the quantity was great or small, for such a price as it deemed proper. This was the outward visible act of which complaint is made, and, being lawful, the law will not hold it to be otherwise because of a secret purpose entertained by the defendant company to inflict loss on the plaintiff by compelling it to reduce the cost of a certain kind of its prints or calicoes.

Nor is the complaint aided in any respect by reference to the law of conspiracy, since the only object that the defendants had in view which the law will consider was the disposition or sale of certain goods which the defendant corporation had the right to sell; and the means employed to accomplish that end, namely, placing them on the market at a reduced cost, were also lawful.

In the brief filed in behalf of the plaintiff in error it is suggested finally that the complaint may be sustained on the ground that it states a good cause of action for maliciously causing certain persons to break or cancel their contracts with the plaintiff, but we think it quite obvious that the complaint was not framed with a view of stating a cause of action of that nature, and that it is insufficient for that purpose. It does not give the name of any person or corporation with whom the plaintiff had a contract for the sale of its prints which was subsequently broken in consequence of the wrongful acts of the defendant. Neither does it show that it had accepted any orders for goods which the jobber was not privileged to cancel at his pleasure. Nor does it allege any special damage incident to the breach of any particular contract. In view of all the allegations which the complaint contains it is manifest, we think, that it was framed with a view of recovering on the broad ground that the issuance of the circular was unlawful and actionable, provided the motive of the defendant company in issuing it was to occasion loss or inconvenience to the plaintiff.

We are of opinion that the complaint did not state a cause of action, as the trial court held, and the judgment below is therefore affirmed.

Sanborn, Circuit Judge (dissenting). I cannot concur in the opinion of the majority in this case because the petition alleges that the defendants by their advertisement of the goods manufactured by plaintiff, without any legitimate trade purpose, prevented jobbers from purchasing goods of the plaintiff, and caused those who had agreed to purchase from it to cancel their orders unless the plaintiff would make them a rebate, so that the plaintiff sustained damage in the sum of $19,000. In my opinion, the gravamen of this cause of action is not the malicious intent or purpose of the defendants, but it is their wrongful act of interfering with the plaintiff’s business, of preventing sales that it would have made, and of causing the cancellation of orders to, or contracts of purchase from, the plaintiff already made. This act, without any allegation or averment of intent or purpose, was itself wrongful, unless it was done for a justifiable purpose. The act of interfering with and injuring the trade or business of the plaintiff without justifiable cause entitled the plaintiff to damages. It is conceded that, if the defendants had advertised these prints for any legitimate trade purpose, for the purpose of selling them for gain for themselves, for the purpose of converting them into money because they preferred their advertised price to the goods, or for the purpose of competing in trade with the plaintiff, they would have had a justifiable cause for inflicting upon it the damages of which it complains, and these damages would then have been damnum absque injuria. But, if they had advertised them for any of these purposes, this case would have constituted an exception to the general rule of law. The general rule is that whenever one injures a man’s business, profession, or occupation he is liable for the damages he inflicts. The exception is that, where the injury is caused by competition in trade or the lawful exercise of a right which the inflictor has, then the injury is justifiable, and no damages can be recovered. But, where such an injury is inflicted, the presumption always is that the rule, and not the exception, applies, and, if the inflictor would justify, he must show that he falls within the exception. The question in this case, therefore, is not whether or not the motive or intent of the defendants will make acts unlawful which were otherwise lawful, but whether or not the intent and purpose of the defendants will justify an otherwise unlawful act, and excuse them from the payment of damages for which, under the general rule of law, they are liable to the plaintiff. It is whether or not the petition shows that they advertised the goods for legitimate trade purposes, so that their acts fell within the exception, which justifies the infliction of damages, and not under the general rule, which requires them to compensate the plaintiff for the injury they have caused. The opinion of the majority assumes that the defendants advertised the prints for a legitimate trade purpose, so that their acts fell within the exception to the general rule. It overlooks the legal presumption that injury to one’s business entitles him to compensatory damages, and the plain averment of the petition that the acts of the defendants were not done for any justifiable cause, but were committed for the sole purpose of inflicting upon the plaintiff the injury they caused.

[After quoting from the averments in the petition.]

Now, no one will dispute the rules of law that the plaintiff in this action had the right to conduct its business of manufacturing and selling prints without the injurious interference of strangers, and that the defendants were subject to the universal rule that they must so use their own property and rights as to inflict no unnecessary injury upon their neighbors. The averments of this petition are that they were not using any of their property or exercising any of their rights for any legitimate trade purpose, but that they were using them for the express purpose of inflicting injury upon the plaintiff, and that they succeeded in imposing the infliction. These allegations seem to me to bring this case under the general rule of law, and to clearly negative the claim that it falls within the exception. They seem to state a good cause of action.

[The learned Judge here cited, and quoted from, various authorities.]

The proposition is sustained by respectable authority; it is just, and I believe it is sound,—that an action will lie for depriving a man of custom (that is, of possible contracts), when the result is effected by persuasion as well as when it is accomplished by fraud or force, if the harm is inflicted without justifiable cause, such as competition in trade. Walker v. Cronin, 107 Mass. 555, 565; Morasse v. Brochu, 151 Mass. 567, 25 N. E. 74, 8 L. R. A. 524; Hartnett v. Association, 169 Mass. 229, 235, 47 N. E. 1002, 38 L. R. A. 194; Delz v. Winfree, 80 Tex. 400, 405, 16 S. W. 111; Doremus v. Hennessy, 62 Ill. App. 391, 403; Van Horn v. Van Horn, 52 N. J. Law, 284, 20 Atl. 485; Temperton v. Russell, 62 Law J. (Q. B. Div. 1893) 412, 419.

Under the legal principles to which reference has been made, and under the authorities which have been cited, the petition in this case states a good cause of action for interference with and injury to the business of the plaintiff by preventing it from obtaining custom it would otherwise have obtained, without any justifiable cause or excuse, and for this reason the demurrer should have been overruled, and the case sent to trial.

There is another reason why the judgment below should be reversed. It is that the petition sufficiently states a cause of action for maliciously interfering with contracts between jobbers in St. Louis and the plaintiff, and inducing the former to break their contracts to the injury of the latter.

For the reasons which have now been briefly stated, the judgment below should, in my opinion, be reversed, and the defendants should be required to answer the petition.