ABBOT v NATIONAL BANK OF COMMERCE (1899) 175 U.S 409

Facts of the case

The plaintiff filed a claim against the defendants National Bank of Commerce, seeking to recover damages over an alleged libel made against the plaintiff by the defendant bank. Plaintiff Abbot was an employee of the defendant bank and had previously served in the bank either as a director or an attorney. In 1895 the defendant National Bank of Commerce had made an application to the court to recover loans made by individuals who had earlier on served as directors or attorneys in the bank, including the plaintiff Abbot. The application made by the bank regarding loans authorized by or at the request and orders of the serving directors and attorneys at the time. In their application to the court, the bank noted that the plaintiff was among the three directors and attorneys who had previously served in the bank.

Additionally, the defendant bank published statements indicating that the plaintiff was insolvent. The plaintiff argued that his financial position and condition were untrue and were defamatory to his reputation. Further, the plaintiff added that the defendant bank was aware of the untruthful nature of the statements and that his financial position at the time was not material to the cause of action instituted by the National Bank of Commerce.

In their defense, the defendants, the National Bank of Commerce, argued that the statements made were at the time believed to be valid and relevant to the subject matter that was addressed. Further, the defendants added that the court handling the case at the time had jurisdiction to hear and determine the case as presented before it by the parties.

Issues for determination before the trial court

The first issue for determination by the Federal court was whether the federal court had jurisdiction to hear and determine the matter.

The second issue was whether the statements made by the defendants were privileged.

Lower Court’s Verdict

The trial court, on the first issue of whether it had jurisdiction, relied on the National Bank of Commerce v Wade[1] where it held that it had jurisdiction. The court dismissed the case citing that the claims brought by the plaintiff did not constitute a cause of action hence could not be sustained in court. On the second issue, the court held that the defamatory statements were privileged. The circuit court ruled in favor of the defendant.

The plaintiff was dissatisfied with the decision rendered by the trial court. He, therefore, appealed the decision of the circuit court in the Supreme Court.

The petition before the Supreme Court

The plaintiff’s arguments

The plaintiff’s first argument is that statements made by the defendants were defamatory. On this argument, the plaintiff, Mr. Abbot, averred that he was not a party to the actions that resulted in the cause of action brought by the defendant, the National Bank of Commerce. On a similar note, the plaintiff advanced his arguments, citing his non-partisan to the action brought by the defendant exempted him from the binding nature of the proceedings. The plaintiff’s second argument is that when the statements were made at the material time, the defendants at the material time of publishing the reports were aware of the plaintiff’s financial position but published the defamatory comments.  The third argument made by the plaintiff is that the statements made by the bank were not relevant to the cause of action brought by the bank. The cause of action as presented by the defendant bank would affect the proprietary rights of the plaintiff in the case. The plaintiff relied on Article 1 and Article 14 of the Amendments of the Constitution of the United States. The plaintiff argued that any effect on his proprietary rights resulting from the case would be a gross violation of the Constitutional Amendments of the United States.

The defendant’s arguments

The defendants advanced the same arguments they presented to the trial court. The first argument was that the defendant reasonably believed they were valid when the defendant published the statements. Secondly, the views were justified, timely, and relevant to the present cause of action against the plaintiff in court. The third argument advanced by the defendant National bank of Commerce was that the court had jurisdiction to hear and determine the issue presented before it.

Relief sought the Plaintiff

The plaintiff Abbot sought damages against the defendants National Bank of Commerce for publishing defamatory statements against him.

Majority of the court decision

The majority decision for the defendants in error was arrived at by 3 of the five judges (Justice W.C. Shaperstein, Justice Charles Richardson, Justice W.H. Bogle, Justice Thomas R. Shepard, and Justice John H. Mitchell) on December 11, 1899. Justice Thomas R. Shepard, W.H. Bogle, and Charles Richardson formed the majority opinion Justice John H. Mitchell and Justice W.C. Sharpstein were dissenting opinions. Therefore, the Supreme Court affirmed the decision of the circuit court, holding that the claimant’s claim on libel could not be sustained. Mr. Justice Harlan delivered the conclusion of the case.

On the first issue of whether the court had competent jurisdiction to hear the matter, the Supreme Court affirmed the trial court’s decision relying on National Bank of Commerce v Wade [2]where the trial court held that it had jurisdiction to hear and determine the case. The court relied on section 5239, which states that if an officer of the bank shall knowingly perform or authorize acts that violate the provisions of the title, then the associations’ privileges shall thereby be forfeited by the violating party.

The second issue the court tackled is whether the statements made by the defendant against the plaintiff were privileged or not. The court, through Justice Harlan, expressed that the doctrine of privilege is centered and anchored on public policy. It involves examining whether any communication made by a party against another party was made maliciously or in good faith. The court also noted that in Barlett v Christhilf[3]The Supreme Court argued that giving legal sanctions in subjects such as the one presented above on the doctrine of privilege would lead to more tremendous hardships than those already in existence., the principle of privilege may, in some instances, accord immunity to a party who is at fault. This may arise when the statements issued or published are untrue, are maliciously made, and limit the administration of justice in cases.

The Supreme Court held that the Supreme Court of Washington had erred by affirming the decision made by the Superior Court of Pierce County. The Supreme Court argued that the consequence of such affirmation is that the plaintiff Abbott would be denied his right to property, which violates the 14th Amendment of the United States Constitution.

Dissenting opinion

The judges with the dissenting opinion were two out of the five-judge bench. These were John H. Mitchell and W. C. Sharpstein. These judges ruled in favor of the plaintiff. According to the two judges, the plaintiff had sufficiently proven his case against the defendant and should have been accorded damages for the loss suffered due to the defamatory statements made against him.

Importance of the case

The importance of this case is that it supports the privileges and immunities granted in the 14 Amendment. Essentially, the privileges and Immunities provided under the 14th Amendment apply to all United States citizens irrespective of their racial background. It guarantees equal protection of the law for all citizens. The importance of this case is that it demonstrates the protection of statements that would otherwise be considered to be defamatory where the claimant could not sustain the claim. In the present case, it protected organizations and allowed organizations to get justice for otherwise wrongful conduct performed by their employees.

Relevance of the case

This case on privilege in communications is still relevant up to date. It helps differentiate defamatory claims from claims that would have otherwise been regarded as defamatory but have been granted immunity under the 14th Amendment.

BIBLIOGRAPHY

Barlett v Christhilf (1888) 69 Md. 219.

National Bank of Commerce v Wade 175 U.S. 409, 411.


[1] National Bank of Commerce v Wade 175 U.S. 409, 411.

[2] Ibid.

[3] Barlett v Christhilf (1888) 69 Md. 219.

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