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INSULL v. NEW YORK WORLD-TELEGRAM CORP.

April 8, 1959

SAMUEL INSULL, PLAINTIFF,
v.
NEW YORK WORLD-TELEGRAM CORPORATION, A CORPORATION, ROY W. HOWARD, MEMPHIS PUBLISHING COMPANY, A CORPORATION, EDWARD J. MEEMAN, INDIANAPOLIS TIMES PUBLISHING COMPANY, A CORPORATION, WALTER LECKRONE, E.W. SCRIPPS COMPANY, A CORPORATION, LOUIS B. SELTZER, DICK THORNBURG, HERALD-POST PUBLISHING CO., A CORPORATION, EDWARD M. POOLEY, KNOXVILLE NEWS-SENTINEL PUBLISHING COMPANY, A CORPORATION, LOYE W. MILLER, PITTSBURGH PRESS COMPANY, A CORPORATION, WEIDMAN W. FORSTER, NEW MEXICO STATE TRIBUNE COMPANY, A CORPORATION, DAN BURROUGHS, CHARLES T. LUCEY, ARTHUR M. SCHLESINGER, JR., HOUGHTON MIFFLIN COMPANY, A CORPORATION, KENNETH E. TROMBLEY, AND HARPER & BROTHERS, A CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Miner, District Judge.

      These are three actions to recover compensatory and punitive damages for alleged libels published by ten corporate and twelve individual defendants. They were originally filed as one action in the Circuit Court of Cook County on December 30, 1957 (Law No. 57 C 18759), and subsequently removed to this Court by defendants pursuant to 28 U.S.C. (1952 ed.) § 1441.

Plaintiff is an Illinois resident. No defendant is a resident of Illinois. One corporate defendant (Houghton Mifflin Company) is licensed to do business in Illinois, and service was had on its registered agent in accordance with Section 111 of the Illinois Business Corporation Act (Ill.Rev.Stat. (1957), c. 32, § 157.111).*fn1 All other defendants were served with process at their respective places of residence under Section 16(1, 2) of the Illinois Civil Practice Act (Ill.Rev.Stat. (1957), c. 110, § 16(1, 2)).*fn2

The complaint is in six counts. Counts 1 and 4 complain of an alleged libel promulgated by New York World-Telegram Corporation, a New York corporation and resident, and Roy W. Howard, a New York resident-citizen and editor of "The New York World-Telegram and The Sun" published by said corporation; Memphis Publishing Company, a Delaware corporation operating in Memphis, Tennessee, and Edward J. Meeman, a Tennessee resident-citizen and editor of "The Memphis Press-Scimitar" published by said corporation; Indianapolis Times Publishing Company, an Indiana corporation and resident, and Walter Leckrone, an Indiana resident-citizen and editor of "The Indianapolis Times" published by said corporation; E.W. Scripps Company, an Ohio corporation and resident, Louis B. Seltzer, an Ohio resident-citizen and editor of "The Cleveland Press" published by said corporation, and Dick Thornburg, an Ohio resident-citizen and editor of "The Cincinnati Post" published by said corporation; Herald-Post Publishing Company, a Texas corporation and resident, and Edward M. Pooley, a Texas resident-citizen and editor of "The El Paso Herald-Post" published by said corporation; Knoxville News-Sentinel Company, a Tennessee corporation and resident, and Loye W. Miller, a Tennessee resident-citizen and editor of "The Knoxville News-Sentinel" published by said corporation; Pittsburgh Press Company, a Pennsylvania corporation and resident, and Weidman W. Forster, a Pennsylvania resident-citizen and editor of "The Pittsburgh Press" published by said corporation; New Mexico State Tribune Company, a New Mexico corporation and resident, and Dan Burrows, a New Mexico resident-citizen and editor of "The Albuquerque Tribune" published by said corporation; and Charles T. Lucey, a Maryland resident-citizen employed as a staff writer by the so-called Scripps-Howard Newspaper Alliance of Washington, D.C.*fn3

Both counts refer to an article written by defendant Lucey which appeared in the October 8, 1957, editions of the newspapers published and edited by the Scripps-Howard defendants, the pertinent excerpt being:

    "Some of labor's entrenched leaders have been
  getting away with racketeering practices of a kind
  that sent the Samuel Insulls and Richard Whitneys to
  jail when big business tycoons were cut down to size
  in the 1930's".

Count 1 demands recompense for injury to plaintiff's "good name, reputation, trade, business and occupation". Count 4 deals with defamation of "the memory of plaintiff's father, all to the great damage and injury of plaintiff."

The Scripps-Howard defendants have filed a motion to dismiss the cause as to them for lack of jurisdiction over their persons. In support, they have submitted affidavits by the defendant editors*fn4 showing:

(a) the state of incorporation and residence and the principal place of business of each corporate defendant, none being within Illinois;

(b) the place of printing of the newspaper published by each corporate defendant, none being within Illinois;

(c) that any Illinois distribution of newspapers published by each corporate defendant is always subsequent to distribution in the city and state where printed;

(d) the number and destination of, and revenue from, copies of each newspaper mailed or shipped into Illinois each day;

(e) that where copies are destined for newsstands or wholesale distributors within Illinois, neither the corporate defendants nor the newspapers published by them exercise any control or supervision over the proprietors thereof;

(f) that payments from Illinois subscribers, newsstands and wholesale distributors are received by mail at the places of business of the respective corporate defendants;

(g) that no corporate defendant or newspaper published by it is licensed or authorized to do business in Illinois, has a registered agent in Illinois, maintains any office in Illinois or is listed in any Illinois telephone or business directory;

(h) that no corporate defendant or newspaper published by it employs as its agents any reporters, advertising solicitors or other persons who are permanently located within Illinois;

(i) that no corporate defendant or newspaper published by it owns or maintains any assets within Illinois in the nature of realty or personalty and none has a bank account within Illinois;

(j) that no defendant affiant personally owns or operates any business within Illinois, and that on and since December 30, 1957, each defendant affiant has resided in a state other than Illinois.*fn5

Affidavits have also been obtained from officers, managers or proprietors of the wholesale distributor and newsstands in Illinois which receive copies of the newspapers published and edited by the Scripps-Howard defendants.*fn6 In substance, the showing made by these affidavits is that the said Illinois distributor and newsstands:

(a) are operated in such a manner as their directors, officers, managers or proprietors alone determine;

(b) are not the agents, employees or servants of any of the Scripps-Howard defendants;

(c) purchase from the Scripps-Howard corporate defendants, as independent contractors for their own account, copies of newspapers published by the said defendants;

(d) receive said newspapers by mail or rail from outside Illinois;

(e) make payment for said newspapers by mail to the Scripps-Howard defendants or their agents who are located outside Illinois;

(f) make no newspaper purchases, either directly or indirectly, from any of the Scripps-Howard defendants other than the one or several of said defendants specifically identified in each respective affidavit, or other than through an Illinois distributor;

(g) respectively sell said newspapers to newsstands or to individual purchasers, and do not account to any of the Scripps-Howard defendants for any of the proceeds and avails of said sales.

Said defendants have attached to their supporting brief three tables, each showing by average number of copies, average revenue and percentage of circulation the extent of Illinois distribution of each of the newspapers published by the Scripps-Howard corporate defendants. Table A demonstrates that Illinois subscribers receive daily a minimum of 6 to a maximum of 37 copies of each newspaper, that the daily revenue averages a minimum of 12 cents to a maximum of $4.44, and that the daily Illinois circulation comprises a minimum of .006 1/2% to a maximum of .03% of that for each newspaper. Table B, "Defendants' Newspapers Mailed Daily to Independent Newsdealers in Illinois", and Table C, "Defendants' Newspapers Mailed Daily to an Independent Wholesaler in Illinois", demonstrate that Illinois circulation by these methods is even more minimal.

Counts 2 and 5 demand judgment against Arthur M. Schlesinger, Jr., alleged by the complaint to be a resident of Massachusetts, and Houghton Mifflin Company, of Boston, Massachusetts.*fn7 The complaint avers, and Houghton Mifflin Company does not deny, that it is authorized to transact business in Illinois.

Both counts refer to a book, "The Crisis of the Old Order (The Age of Roosevelt)", written by defendant Schlesinger and published by defendant Houghton Mifflin Company in January, 1957. Excerpts which plaintiff deems libelous are:

    "Insull's ideas extended far beyond his own
  utilities system. From his estate in Libertyville, he
  dominated Chicago, bribing the state utilities
  commission, affably encouraging the corruptions of
  local politics, even building an opera house."
  Chapter 15, page 120.
    "If Kreuger, the Match King, was a gigantic thief,
  what Titan — or even Tycoon — could be
  trusted in the future? In Chicago, investors were
  already haunting the offices of Samuel Insull,
  demanding that he make good on his worthless stock.
  Protected night and day by thirty-six personal
  bodyguards, Insull, who believed in his own magic,
  tried to save his crumbling estate through new loans
  and new manipulations. But his fantastic
  improvisation was slowly dematerializing before
  everyone's eyes. When he abruptly departed for Europe
  in 1932, having resigned his eighty-five
  directorships, his sixty-five chairmanships, and his
  eleven presidencies, the New York Times wrote, `Mr.
  Insull fell, not because his ideals were wrong, but
  because of his persistent optimism * * *

  He stands withal as one of the foremost and greatest
  builders of American industrial empires.'
    "Yet by September it seemed possible that the great
  industrial builder was guilty of more than optimism;
  in the next months a Cook County grand jury indicted
  him for embezzlement. Soon his lawyers were sending
  him coded telegrams advising him to seek refuge
  beyond extradition in Greece. The old man, sitting
  disconsolately in European exile, could not
  understand what had happened. `Why am I not more
  popular in the United States?' he said. `What have I
  done that every banker and business magnate has not
  done in the course of business?' And Donald Richberg,
  Insull's old enemy in Chicago, voiced the popular
  verdict: `The true significance of the career of
  Samuel Insull lies in the fact that his sins were not
  exceptional, save in the sweep of his ambitions and
  the extent of the injuries he inflicted.'" Chapter
  26, pages 254-255.

Count 2 alleges injury to plaintiff's "good name, reputation, trade, business and occupation", while Count 5 demands damages for defamation of "the memory of plaintiff's father, all to the great damage and injury of plaintiff."

Defendant Schlesinger has appeared specially and has moved to dismiss the action as to him and to quash the return of summons for lack of jurisdiction over his person.

Both Schlesinger defendants have further moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, 28 U.S.C.A.,*fn8 to dismiss Counts 2 and 5. In support, they have filed affidavits of their attorney in an effort to show that, as a matter of law, plaintiff could not have been libeled by anything in the Schlesinger book, because plaintiff's name is, in fact, "Samuel Insull, Jr.", not "Samuel Insull", and his sole reputation is as "Samuel Insull, Jr."

Alternatively, the said defendants have moved under Rule 20, Federal Rules of Civil Procedure,*fn9 to sever Counts 2 and 5 and proceed with them separately from the remainder of the complaint. In support, said defendants state that the right to relief alleged against them arises out of a totally independent transaction or occurrence, and that it does not involve questions of fact or law common to the rights to relief asserted by plaintiff against the other defendants.

Counts 3 and 6 demand judgment against Kenneth E. Trombley, alleged to reside in Maryland and work in Washington, D.C., and Harper & Brothers, a New York corporation.*fn10 Both counts specify as libelous identical excerpts from the book, "The Life and Times of a Happy Liberal", written by defendant Trombley and published by defendant Harper & Brothers in 1954:

    "The concluding years of the nineteenth century and
  the early ones of the twentieth, presented golden
  days for the nation's financiers. But as the 1900's
  settled down, reaction set in and the people demanded
  an accounting of what had been going on. In 1912,
  Senatorial investigators were told that one group of
  the money barons controlled something like $25
  billion. Old J.P. Morgan himself admitted to
  Congressmen that he and seventeen of his colleagues
  held 746 directorships in 134 of the country's
  biggest banks, railroads, steamship lines, express
  companies, and industrial concerns. About this same
  time, Samuel Insull

  was getting started out in Chicago; getting started
  on a career that was to end with his going to jail
  for embezzlement some twenty years later. He was the
  head man in the utilities field — a field
  probably more vulnerable to attack than others
  because of its almost unbelievably fallacious
  actions." Chapter III, page 35.
    "Cooke finished Lecture Number One with a final
  blast at the `education' operations of the utilities.
  He took particular note of a series of lectures given
  regularly at the School of Commerce at Northwestern
  University. A lecturer who had top billing there was
  the President of the Chicago Edison Company, Samuel
  Insull. He spoke on a subject he undoubtedly knew
  well, the `Centralization of Power Supply.' If he
  convinced the students of this story, he had better
  luck than he had later with another story before a
  grand jury; they gave him twenty years to write new
  answers to their questions." Chapter IV, page 52.

As in the counts concerning the Scripps-Howard defendants and the Schlesinger defendants, the first Trombley count (Count 3) alleges injury to plaintiff by defamation of plaintiff, and the second Trombley count (Count 6) alleges injury to plaintiff by defamation of his father.

The Trombley defendants have appeared specially and have moved to dismiss Counts 3 and 6 and to quash the return of service. As grounds, they allege lack of jurisdiction over the person, insufficiency of service of process, the bar of the Illinois statute of limitations and failure to state a claim upon which relief can be granted. In the alternative, and on the same grounds, they have moved for summary judgment under Rule 56, Federal Rules of Civil Procedure.

Affidavits in support of such motions have been submitted by the chairman of the board of directors of defendant Harper & Brothers. In substance, they affirm that defendant corporation:

(a) is a New York corporation not registered to do business in Illinois;

(b) maintains no office or plant, and has no telephone listing in Illinois;

  (c) owns property in Illinois only to the extent of books on
consignment with various Illinois jobbers and book stores;
  (d) is a book publisher and distributes its books ...

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