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Rainier''s Dairies v. Raritan Valley Farms Inc.

Decided: October 31, 1955.


For remandment -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Burling, Jacobs and Brennan. For reversal -- Justice Wachenfeld. The opinion of the court was delivered by Jacobs, J. Wachenfeld, J. (dissenting).


The plaintiff appealed to the Appellate Division from an adverse summary judgment entered in the Law Division. We certified under R.R. 1:10-1(a).

In November 1953 Joseph and Michael Gonnella, trading as Golden Dawn Dairy, filed an application with the Office of Milk Industry for permission to transfer their source of supply from the defendant Raritan Valley Farms to the plaintiff Rainier's Dairies. While that application was pending, Raritan filed a verified petition with the Director of Milk Industry in which it alleged that the Gonnellas had entered into an illegal agreement with Rainier to purchase milk from Rainier at two cents per quart below the minimum prices fixed by the Director. The defendant Raritan Valley Farms Producers Association also filed a verified petition with the Director embodying allegations similar to those contained in Raritan's petition. Both petitions prayed that the Director investigate the conduct of the Gonnellas and Rainier and

"proceed to formal hearing to revoke or condition" the licenses issued to them by the Office of Milk Industry "if such appears justified upon the proofs presented." The Gonnellas and Rainier filed answers to the petitions in which they denied the alleged illegal agreement, and interrogatories by Rainier were answered under oath by Raritan.

In accordance with departmental practice the Director, on the basis of the verified petitions which had been filed by Raritan and the Producers Association, issued a complaint and order to show cause why the licenses held by the Gonnellas and Rainier should not be revoked because of the alleged illegal agreement. A formal hearing on the order to show cause was duly held; various witnesses were called by Raritan and the Producers Association to support the allegations of the petitions and others were called by the Gonnellas and Rainier in opposition; and the witnesses were duly examined and cross-examined by counsel for the respective parties. After the close of the hearing the Director filed his formal conclusions and order. He found that the petitioners had "not established a case by a preponderance of the evidence necessary to sustain the burden of proof" and he accordingly denied their application for revocation or conditioning of the Rainier and Gonnella licenses. He pointed out, however, that the testimony had disclosed that the Gonnellas had attempted to obtain from several dealers preferential contracts which would have entailed the purchase and sale of milk below the minimum prices fixed by the Director; he accordingly denied the application by the Gonnellas for permission to transfer their source of supply from Raritan to Rainier.

Following the entry of the Director's conclusions and order the plaintiff filed its Law Division complaint seeking damages from Raritan, the Producers Association, and the various named individual defendants associated with them. The complaint contained many very vague and general allegations in eight counts and sought to set forth claims, sounding in (1) libel and (2) malicious interference with its business, and grounded upon the verified petitions filed with the Office

of Milk Industry. The complaint did not seek to set forth the recognized essential elements of an action in the nature of malicious prosecution, nor did it refer to any specific or identifiable acts by the defendants other than their participation in the filing of the verified petitions and the proceeding before the Director.

On January 17, 1955 the defendants served notice of motion to dismiss the complaint and for the entry of summary judgment on the ground that "the acts alleged to have been committed by the defendants and complained of were relevant to and a material part of a judicial proceeding and by reason thereof absolutely privileged." In support of their motion the defendants submitted affidavits which embodied most of the record of the proceeding before the Director and set forth that none of the defendants had ever conspired "to libel the plaintiff or to publish and circulate false and ill-founded statements" regarding it and that there was no publication by the defendants of the petitions except that involved in their filing with the Office of Milk Industry. No affidavits in opposition to the motion were filed by the plaintiff and the matter was duly argued before Judge Lloyd on the record thus presented to him. He expressed the view that the complaint was grounded entirely upon the proceeding before the Director; that the Director acted "as a quasi-judicial officer"; and that the statements which the plaintiff contended were defamatory were "absolutely privileged"; accordingly he granted the motion and the plaintiff's appeal is from the ensuing summary judgment.

The law of defamation (libel and slander) imposes broad liability for the publication of false matters which tend to injure the reputation of others. See Prosser, Torts 777 (1941); 3 Restatement, Torts §§ 558 et seq. (1938). It embodies the important public policy that individuals and business entities should generally be free to enjoy their reputations unimpaired by false and defamatory attacks. See Rogers v. Courier Post Co., 2 N.J. 393 (1949). Occasionally, however, that policy conflicts with a counter-policy which suggests that in certain situations there is a paramount

public interest that persons be permitted to speak or write freely without being restrained by the possibility of an ensuing defamation action. In these situations the courts recognize a privilege or immunity which may be absolute or qualified; the difference is that the absolute privilege affords complete protection whereas the qualified privilege affords protection only if there is no ill motive or malice in fact. See Andrews v. Gardiner, 224 N.Y. 440, 121 N.E. 341, 2 A.L.R. 1371 (Ct. App. 1918); Prosser, supra 821 et seq.; Salmond, Torts 449 (11 th ed. 1953); Winfield, Torts 333 (6 th ed. 1954). The most noteworthy illustration of the absolute privilege or immunity is that afforded in judicial proceedings where judges, attorneys, witnesses, parties and jurors are fully protected against defamation actions based on utterances made in the course of the judicial proceedings and having some relation thereto. See Rogers v. Thompson, 89 N.J.L. 639, 640 (E. & A. 1916); La Porta v. Leonard, 88 N.J.L. 663, 665 (E. & A. 1916). See also Veeder, Absolute Immunity in Defamation, 9 Col. L. Rev. 463 (1909); Restatement, supra §§ 585-590; 30 N.Y.U.L. Rev. 171 (1955); 15 Ohio St. L.J. 330 (1954); 28 St. Johns L. Rev. 129 (1953). Cf. Kantor v. Kessler, 132 N.J.L. 336 (E. & A. 1945); O'Regan v. Schermerhorn, 25 N.J. Misc. 1 (Sup. Ct. 1946).

In the Rogers case, an action for slander was instituted on the basis of statements made by an attorney during a creditors' meeting before a referee in bankruptcy; the Court of Errors and Appeals held that the meeting was part of the proceedings of the court of bankruptcy and that consequently statements which had some relation thereto were absolutely privileged "even if malicious and intended to defame." In the La Porta case, a similar result was reached with respect to a proceeding in the recorder's court of Hoboken. In the O'Regan case, Judge, later Justice, Ackerson held that grand jurors were absolutely privileged against a defamation action based on a ...

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