Opinion
Nos. 42337-42342.
May 28, 1962.
1. Judgments — collateral estoppel — generally.
"Collateral estoppel" operates, following final judgment, to establish conclusively matter of fact or law for purposes of later lawsuit on different cause of action between parties to original action.
2. Judgments — collateral estoppel — conclusiveness.
Where question of fact essential to judgment is actually litigated and determined by valid and final judgment, that determination is conclusive between parties in subsequent suit on different cause of action.
3. Judgments — collateral estoppel — policies underlying doctrine.
Policies underlying doctrine of res judicata and collateral estoppel are interest of state in end to litigation, and concern of public in settlement of litigation in interest of stable society.
4. Judgments — collateral estoppel — reasons for not applying doctrine.
Principal reasons for not applying doctrine of collateral estoppel in borderline situations are right of each person to be accorded his full day in court, and difficulty of litigant foreseeing possible significance in future cases of matters being currently litigated.
5. Discovery — legitimate functions of.
Legitimate function of discovery is to furnish evidence.
6. Discovery — ancillary remedy — main fact in controversy between, not at issue.
If proper case for discovery is exhibited in bill, defendant cannot require proof of main fact in controversy between parties as essential preliminary to discovery.
7. Judgments — collateral estoppel — matters concluded.
By doctrine of collateral estoppel, parties are precluded from relitigating issues that have been litigated and decided of necessity in prior action.
8. Judgments — discovery — production of mercantile reports — collateral estoppel — credit company not protected by, in libel action.
Pure bill of discovery in chancery for production of mercantile credit reports was remedy ancillary and supplementary to right to sue for libel, and holding that reports were qualifiedly privileged and that plaintiff failed to offer sufficient evidence to warrant their production did not estop plaintiff from suing for libel.
9. Judgments — discovery — collateral estoppel — credit company's subsidiary and employees not protected by, in libel action.
Inasmuch as credit reporting corporation was not protected from libel suit on basis of collateral estoppel involving prior suit against it, its subsidiary and employees of two corporations could not raise that doctrine successfully.
10. Husband and wife — libel and slander — claims of husband represented separate causes of action from claims of wife.
Husband's rights, if any, against credit reporting company and others based upon allegedly libelous publications of mercantile credit reports with reference to him, were personal to him and independent of those of his wife who brought similar suit against same defendants.
11. Libel and slander — mercantile credit reports — qualifiedly privileged.
Mercantile credit reports are qualifiedly privileged. Sec. 1659, Code 1942.
12. Discovery — statutes — production of qualifiedly privileged matter.
Statute authorizing trial court to direct inspection does not apply to qualifiedly privileged material unless movant's evidence shows that person in possession of qualifiedly privileged matter has probably exceeded privilege by publishing it with malice and bad faith and, on motion to produce, such issue is for discretion of trial court. Sec. 1659, Code 1942.
13. Libel and slander — discovery — mercantile credit reports — qualified privilege — burden of proof — qualified privilege.
Plaintiffs suing for libel were not entitled to merchantile credit reports in absence of showing that credit reporting company had probably exceeded privilege by publishing reports with malice and bad faith. Sec. 1659, Code 1942.
14. Discovery — production of qualifiedly privileged matter — to entitle movant to production and inspection.
Before movant is entitled to production of qualifiedly privileged documents, he must present facts which establish, prima facie, that information is material and relevant, that disclosure is necessary or essential to proper development of cause of action, that information is not otherwise available, and that respondent to motion has exceeded qualified privilege by malice and bad faith. Sec. 1659, Code 1942.
Headnotes as approved by Ethridge, J.
APPEALS from the Circuit Court of Adams County; JAMES A. TORREY, J.
Satterfield, Shell, Williams Buford, Jerome B. Steen, Jackson, William F. Riley, E.H. Fitzpatrick, Jr., Natchez, for appellants.
I. The lower court erred in sustaining the plea of res judicata, and dismissing with prejudice the suits filed by the appellant.
A. There must be a valid and existing judgment before the doctrine of res judicata can be applied. 30A Am. Jur., Sec. 346 p. 388.
B. A judgment upon which the doctrine of res judicata is based must have been rendered on the merits. Callender v. Lamar Life Insurance Co., 182 Miss. 609, 182 So. 119; Johnson v. Walker, 86 Miss. 757, 39 So. 49; Mosby v. Wall, 23 Miss. 81; Retail Credit Company v. Garraway, 240 Miss. 230, 126 So.2d 271; 30A Am. Jur., Sec. 347 p. 388; 50 C.J.S., Sec. 626 p. 51.
C. The doctrine of res judicata is not available as a bar to a subsequent action if the judgment in the former action was rendered because of a misconception of the remedy available, or of the proper form of proceeding. Retail Credit Co. v. Garraway, supra; Viator v. Stone, 201 Miss. 487, 29 So.2d 274; 30A Am. Jur. Sec. 349 p. 391.
D. In the former action of discovery and the instant actions, there is no identity in the thing sued for; no identity in the cause of action; no identity of persons and parties; and no identity of quality in the persons for or against whom the claim is made. Bright v. Finkbine Lumber Co., 116 Miss. 491, 77 So. 373; Callender v. Lamar Life Insurance Co., supra; Creegan v. Hyman, 93 Miss. 481, 46 So. 952; Estes v. Memphis C.R. Co., 152 Miss. 814, 119 So. 199; Granquist v. Crystal Springs Lumber Co., 190 Miss. 572, 1 So.2d 216; Jones v. George, 126 Miss. 576, 89 So. 231; Palmer v. Clarksdale Hospital, 213 Miss. 611, 57 So.2d 476; Tobias v. Tobias, 225 Miss. 392, 83 So.2d 638.
E. The doctrine of res judicata will never be applied when the ends of justice would be defeated. 30A Am. Jur., Sec. 325 p. 372.
II. The lower court erred in overruling the appellant's motion for inspection of documents and papers. Citizens Bank of Hattiesburg v. Tracey, 120 Miss. 413, 82 So. 307; Equitable Life Assurance Society of the United States v. Clark, 80 Miss. 471, 90 So. 964; Shepherd v. Johnston, 201 Miss. 99, 28 So.2d 661; Sec. 1003, Code 1906.
Robert W. Biccum, Brandon, Brandon, Hornsby Handy, Natchez; Watkins, Pyle, Edwards Ludlam, Jackson, for appellees.
I. The case of Retail Credit Company v. Garraway, 240 Miss. 230, 126 So.2d 271, a decision on the merits, adjudicated that the investigation reports made by Retail Credit Company and furnished to State Automobile Mutual Insurance Company, State Farm Mutual Insurance Company and the Boston Insurance Company were made on a qualifiedly privileged occasion in good faith in the absence of malice. Callender v. Lamar Life Insurance Co., 182 Miss. 609, 182 So. 119.
II. Appellant, Mrs. Delores Garraway, is barred by the doctrine of res judicata and collateral estoppel from litigating the causes of action for libel in the Circuit Court below against appellee, Retail Credit Company, since issues vital to these causes of action have already been determined between these parties. Cotton v. Walker, 164 Miss. 208, 144 So. 45; Ethridge v. Webb, 210 Miss. 729, 50 So.2d 603; Fair v. Dickerson, 164 Miss. 432, 144 So. 238; Lyle Cashion Co. v. McKendrick, 227 Miss. 894, 87 So.2d 289; Townsend v. Beavers, 185 Miss. 312, 188 So. 1; 33 Am. Jur., Libel and Slander, Secs. 124, 125.
III. Appellant, Mrs. Garraway, having litigated the issue of the qualifiedly privileged occasion on which the reports in controversy were made and the issue of malice or bad faith in a final action on the merits, is barred by the doctrine of res judicata and collateral estoppel from again litigating these issues with the defendants, The Credit Bureau, Inc. of Georgia, Clarence Bowers, Johnny Weeks and Jack H. Beattie, who were not parties to the prior action. Coca Cola Co. v. Pepsi Cola Co., 36 Del. 124, 172 A. 260; Gammel v. Ernst Ernst, 245 Minn. 249, 72 N.W.2d 364, 54 A.L.R. 316; Tezak v. Cooper (Ill.), 164 N.E.2d 493; United Banana Co. v. United Fruit Co., 172 F. Supp. 580.
IV. Appellant, Mrs. Garraway, having litigated the issue of the qualifiedly privileged occasion on which the reports in controversy were made and the issue of malice or bad faith in a final action on the merits, is barred by the doctrine of res judicata and collateral estoppel from again litigating these issues with the agents and employees of Retail Credit Company who were in privity with Retail Credit Company in the prior action. Spector v. El. Ranco, Inc., 263 F.2d 143; Spitz v. Be Mac Transport Co. (Ill.), 79 N.E.2d 859; 30 Am. Jur., Judgments, Sec. 430.
V. The Circuit Court below did not commit error by overruling the appellant's motion for inspection of documents and papers. Estes v. Memphis C.R. Co., 152 Miss. 814, 119 So. 199; Retail Credit Co. v. Garraway, supra; Griffith's Mississippi Chancery Practice (2d ed.), Sec. 430 p. 427.
VI. Appellant, Dwight Garraway, was in privity with Mrs. Garraway in the prior case of Retail Credit Company v. Mrs. Delores Garraway, 240 Miss. 230, 126 So.2d 271. Garraway v. Retail Credit Company, supra; Palmer v. Clarksdale Hospital, 213 Miss. 611, 57 So.2d 476.
VII. Appellant, Dwight Garraway, is barred by the rule of stare decisis from bringing the actions for defamation on the reports in controversy which have previously been before this Court. Retail Credit Co. v. Garraway, supra; White v. Williams, 159 Miss. 132, 132 So. 573, 76 A.L.R. 757.
VIII. The exhibits to the declaration are incapable of the meaning ascribed to them by appellant. State v. Woodruff, 170 Miss. 744, 150 So. 760; Odgers, Libel and Slander (6th ed.), Sec. 279.
The principal issue is whether a judgment in a prior discovery suit in equity, holding mercantile credit reports were qualifiedly privileged and denying production of them because complainant failed to show malice and bad faith, collaterally estopped her in a later libel action from litigating against the same defendant questions of malice and bad faith in issuance of the reports. We hold it did not.
These six suits for libel were consolidated for argument in this Court. There are two groups of three suits each. The first (called Group 1) are consolidated causes Nos. 42,337, 42,340 and 42,342. They involve three separate actions brought by Mrs. Delores Garraway against the Retail Credit Company and others in the Circuit Court of Adams County, for allegedly libelous publication of three mercantile credit reports. By agreement of the parties, these three actions were consolidated in a single appeal. They involve the same issues.
The second group of cases (called Group 2) are consolidated causes Nos. 42,338, 42,339, and 42,341. They were three separate suits brought by Dwight Garraway, the husband of Mrs. Delores Garraway, against Retail Credit Company and others, in the Circuit Court of Adams County, based upon three allegedly libelous publications of mercantile credit reports with reference to Dwight Garraway. These three causes involve the same issues. In all six actions the circuit court sustained pleas by defendants of res judicata and collateral estoppel and their motions to dismiss. These appeals are from orders of the trial court so adjudicating. The allegations, pleas, proceedings and orders in each group of cases, called Group 1 and Group 2, are similar, so, in discussing them, references to these cases will be to one case of each group.
In October 1959, Mrs. Delores Garraway, appellant in Group 1, filed a bill of complaint in the Chancery Court, First Judicial District of Hinds County, Mississippi, against Retail Credit Company (called Retail Credit) seeking the discovery of certain mercantile credit reports made by Retail Credit to three of the latter's customers, which were insurance companies. The bill charged that these reports were falsely and maliciously made, were libelous per se, and prayed solely for their discovery and production. Defendant admitted making the reports to these companies, which were its customers, for a compensation, but denied they were false or malicious. It pleaded affirmatively that they were qualifiedly privileged. At the hearing, complainant offered only token evidence on the issue of malice. The chancery court overruled the defendant's plea, and directed Retail Credit to produce the reports.
An appeal was taken with supersedeas to this Court. The facts of that case and the decision of this Court are fully set forth in Retail Credit Company v. Garraway, 240 Miss. 230, 126 So.2d 271 (1961). It held: The decree was final, and settled the issues in that case. They were complainants' right of discovery, and the validity of Retail Credit's plea of qualified privilege. Mercantile credit reports, including the ones involved, are qualifiedly privileged. In a pure bill of discovery in equity, "the defendant may plead and put in issue the question of qualified privilege." The burden of proof was on complainant to show that the reports "were made from an improper, malicious motive, and not for a reason which would otherwise render them privileged." It was then said: "A careful review of the testimony renders it manifest that complainant wholly failed to show these statements were maliciously made. On the contrary, the evidence reflects they were made in good faith . . ." Complainant did not meet her burden of proof, of showing malice and bad faith. Hence the decree was reversed, and judgment was rendered for Retail Credit, "dismissing the bill with prejudice."
While the discovery suit was pending on appeal, but after the chancery decree, Mrs. Garraway filed the three separate libel suits in the Circuit Court of Adams County, against Retail Credit and four other defendants. She alleged that the Credit Bureau, Inc., of Georgia (Credit Bureau) is a subsidiary of Retail Credit, and the defendants, Clarence Bowers, Johnny Weeks, and Jack H. Beattie, were agents and employees of the defendant corporations. In 1951 and 1952, plaintiff was an employee of the defendant corporations in Adams County, Mississippi, and thereafter opened her own collection service business, and later a credit reporting business. Plaintiff has always been of good moral character and reputation in the community, but in 1959 defendants conspired together to injure, discredit, and destroy her character and reputation, and, in carrying out such conspiracy, circulated without any proper investigation, maliciously and not in good faith, to an automobile insurance company and other persons unknown, reports to the effect that she and her husband were heavy social drinkers; that about five or six times a year she drank intoxicants to the point of being unable to control her faculties; and that she was criticized by others for slow payment of debts. Alleging these reports were made maliciously, without adequate investigation, and not in good faith, plaintiff sought actual and punitive damages. The other two suits in Group 1 had substantially similar allegations, except they pertained to mercantile credit reports made to two other automobile insurance companies.
To this declaration all of the defendants pleaded that the judgment of this Court in Garraway v. Retail Credit Company constituted res judicata and collateral estoppel on the issues of malice and bad faith as related to the qualified privilege. The circuit court sustained these pleas.
(Hn 1) First. Collateral estoppel is a doctrine which operates, following a final judgment, to establish conclusively a matter of fact or law for the purposes of a later lawsuit on a different cause of action between the parties to the original action. Because of its application to a different cause of action from that involved in the first suit, the doctrine is broader than the "merger" and "bar" aspects of res judicata. Nevertheless, the restriction of collateral estoppel to issues actually litigated and necessarily determined in the first action circumscribes operation of the doctrine more closely than "merger" or "bar", which may affect matters which could have been litigated. Restatement, Judgments, Sec. 45; Polasky, Collateral Estoppel — Effects of Prior Litigation, 39 Iowa L. Rev. 217 (1954). (Hn 2) In short, where a question of fact essential to a judgment is actually litigated and determined by a valid and final judgment, that determination is conclusive between the parties in a subsequent suit on a different cause of action. Anno., 138 A.L.R. 346-352 (1939); Lyle Cashion Co. v. McKendrick, 227 Miss. 894, 87 So.2d 289 (1956); Etheridge v. Webb, 210 Miss. 729, 50 So.2d 603 (1951); Townsend v. Beavers, 185 Miss. 312, 188 So. 1, 189 So. 90 (1939); Cotton v. Walker, 164 Miss. 208, 144 So. 45 (1932).
The question is whether this is a proper case for application of the doctrine of collateral estoppel. We do not think it is. The prior suit in chancery was a pure bill of discovery. The only relief sought was production of the mercantile credit reports. Although the bill of complaint alleged that the reports were made maliciously and not in good faith, a prerequisite to discovery in chancery is that complainant must aver that she has a meritorious case for the enforcement of a civil or property right, and the discovery is of material and relevant matters which are exclusively within the custody of the defendant, and not within the reasonable reach of complainant. Griffith, Miss. Chancery Practice (2d ed. 1950), Sec. 429. In the prior suit Mrs. Garraway did not seek a trial on the merits of the tort, and did not ask for damages for the alleged libel. She simply sought production of the reports. Although the chancery court held complainant was entitled to production, this Court, reversing, concluded the reports were qualifiedly privileged, and in the discovery proceeding complainant failed to show that the privilege had been exceeded, by adequate evidence on bad faith and malice.
(Hn 3) This case, as between plaintiff and Retail Credit, is in the twilight zone, the peripheral area of application of collateral estoppel. Important policies underlie the doctrines of res judicata and collateral estoppel, namely, that the interest of the state requires that there be an end to litigation, and the concern of the public in the settlement of litigation in the interest of a stable society. (Hn 4) However, conflicting persuasive reasons can be found for not applying the doctrine in borderline situations of this type. The principal ones are that each person shall be accorded his full day in court, and the difficulty of a litigant foreseeing the possible significance in future cases of matters being currently litigated.
The nature, form and purpose of the prior action requires narrowing of application of the doctrine in this instance. Any salutary effects attributable to conclusiveness are outweighed here by factors opposing preclusion. Application of collateral estoppel to a prior action seeking purely discovery in equity would in the future have the coercive effect of forcing litigants to full-scaled effort over minor disputes, that is, in this instance, the discovery and production of documents, and would act to increase rather than contract the extent of litigation. See Polasky, 39 Iowa L. Rev. 217; Scott, Collateral Estoppel by Judgment, 56 Harv. L. Rev. 1, (1942); Note, Collateral Estoppel by Judgment, 52 Col. L. Rev. 647 (1952); Developments in the Law — Res Judicata, 65 Harv. L. Rev. 818 (1952); Comment, Privity and Mutuality in the Doctrine of Res Judicata, 35 Yale L.J. 607 (1926); 2 Freeman, Judgments (5th ed. 1925), Sec. 624, et seq.; Symposium on Res Judicata, 39 Iowa L. Rev. 213-349 (1954).
(Hn 5) The judgment in the discovery action did not involve a decision on the merits of plaintiff's cause of action for libel. A pure bill of discovery in chancery, for production of the reports, was a remedy ancillary and supplementary to plaintiff's right to sue for damages for libel. This case is a rather singular one. The only related decision which we have found is O'Donnell v. Morris Run Coal Mining Co., 319 Pa. 293, 179 A. 454 (1935). Plaintiff sued in trespass to recover damages for the alleged unlawful mining of coal. After beginning that action, plaintiff, as ancillary to it, filed a bill of discovery to ascertain the amount of coal which defendant had removed. In the discovery proceedings that court considered the question of title to the coal, and was of the opinion it was vested in plaintiff. In the trespass action plaintiff then argued that this determination was res judicata. The court did not agree. It said that the discovery action was "but an incident" to the trespass action. The fundamental question of title was not an issue in that merely ancillary proceeding. The legitimate function of discovery is to furnish evidence. (Hn 6) If a bill exhibit a proper case for discovery, a defendant cannot require proof of the main fact in controversy between the parties as an essential preliminary to the discovery. The O'Donnell case is analogous to the instant one.
(Hn 7) By the doctrine of collateral estoppel, parties are precluded from relitigating issues that have been litigated and decided of necessity in a prior action. (Hn 8) The prior action here, the pure bill of discovery suit, litigated only Mrs. Garraway's right to production of the credit reports. It held that the reports were qualifiedly privileged, and she failed to offer sufficient evidence to warrant their production. It did not hold that she failed to offer sufficient evidence to support a recovery of damages for libel. That issue has not been decided, and may be decided in the instant cases. Hence the circuit court erred in sustaining Retail Credit's plea in bar to Mrs. Garraway's suit against it. (Hn 9) Second. It therefore follows that the trial court erred also in sustaining the pleas in bar of the other three defendants in Mrs. Garraway's three suits against them. They are alleged to be a subsidiary corporation of Retail Credit, and three employees of the two corporations. Since Retail Credit is not protected by collateral estoppel, a fortiori these other defendants in Group 1 cannot raise that doctrine successfully. Hence we do not reach any issue presented by the line of cases modifying and restricting the traditional requirements of mutuality and privity. See Currie, Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine, 9 Stan. L. Rev. 281 (1957); Note, Res Judicata with Reference to Persons Neither Parties nor Privies, 57 Harv. L. Rev. 98 (1943); Polasky, 39 Iowa L. Rev. at 241-251.
(Hn 10) Third. In the three cases in Group 2, Dwight Garraway brought three separate actions against Retail Credit and the four other defendants alleging libelous publication of mercantile credit reports concerning him. Even if collateral estoppel applied to Mrs. Garraway, and we have held it does not, there is no privity between these parties and her. Dwight Garraway's rights, if any, were personal to him and independent of those of his wife. The two claims represent separate causes of action. Palmer v. Clarksdale Hospital, 213 Miss. 611, 57 So.2d 476 (1952).
(Hn 11) Fourth. There was no error in the trial court's overruling of plaintiff's motion for inspection and production of the mercantile credit reports. The motion was based upon Miss. Code 1942, Rec., Sec. 1659, which authorizes a trial court, "on good cause shown", to direct an inspection, "provided, however, this act shall neither be applicable to the work product of counsel for any party nor to matters of privilege . . ." (Emphasis added). Mercantile credit reports are qualifiedly privileged. Retail Credit Company v. Garraway, supra. (Hn 12) If literally construed the quoted limitation of Sec. 1659 would seem to negative its application under any circumstances to privileged matter. However, the legislative intent is clear, we think, that Sec. 1659 does not apply to documents and other material which are qualifiedly privileged, unless, in the hearing on the motion to produce, movant's evidence shows that the person in possession of the qualifiedly privileged matter has probably exceeded, on a prima facie basis, the privilege by publishing it with malice and bad faith. On the motion to produce, this is an issue for the trial court in its sound discretion. Louisiana Oil Corp. v. Renno, 173 Miss. 609, 157 So. 705 (1934). (Hn 13) It was not error to overrule appellants' motions to produce in all of the cases, because movants offered no evidence on the motion to comply with their burden of proof to show that Retail Credit had probably exceeded the privilege by publishing the reports with malice and bad faith.
(Hn 14) Before movant is entitled to production of qualifiedly privileged documents, he must present facts, on the hearing on the motion, which establish a prima facie case in his favor with reference to (1) the materiality and relevancy of the information in question, (2) disclosure is necessary or essential to the proper development of the cause of action, (3) the information is not otherwise available, and (4) the respondent to the motion has exceeded the qualified privilege by malice and bad faith. See 17 Am. Jur., Discovery and Inspection, Sec. 16-20; Ibid., Sec. 16; 27 C.J.S., Discovery, Sec. 5, 72; Anno., Libel and Slander: Report of Mercantile Agency as Privileged, 30 A.L.R. 2d 776 (1953); Anno., Statements of Parties or Witnesses as Subject of Pre-Trial or other Disclosure, Production or Inspection, 73 A.L.R. 2d 12, 84, 133 (1960); Anno., Construction and Effect of Federal Rules and Similar State Statutes and Rules, Relating to Preventing, Limiting, or Terminating the Taking of Depositions, 70 A.L.R. 2d 685 (1960); Newell, Slander and Libel (4th ed 1924), Secs. 345, 346.
In summary, the judgments of the circuit court, in all of these cases, sustaining the defendants' pleas in bar and motions to dismiss are reversed, and the causes are remanded for further proceedings consistent with this opinion. Cf., Louisiana Oil Corporation v. Renno, 173 Miss. 609, 157 So. 705 (1934).
Reversed and remanded.
All Justices concur, except Gillespie, J., who took no part.