Drug Research Corp. v. Curtis Publishing Co.

Per Curiam. This is an appeal from an order denying a motion to dismiss the complaint for insufficiency. The action is one for libel, in which no special damages are pleaded. We are, of course, not now concerned with questions of proof to sustain the allegations of the complaint. Simply stated, the problem presented is whether a publication that defames a product and charges fraud and deceit upon the public, also defames the manufacturer thereof, although he is not specifically named in the libelous article. It is alleged that the plaintiff is the manufacturer and distributor of a product marketed under the name Begimen, which, it is claimed, is an aid in weight reduction. The defendant Curtis published an article, written by the defendant Pearse, entitled “ Don’t Fall for the Mail Frauds ”. The publication mentions the product by name and refers to a concern called ‘ ‘ Wonder Drug Corporation ’ ’ as having advertised the product extensively. The article states that, after investigation by postal inspectors, Wonder Drug executed “ an affidavit of discontinuance ” to the soliciting of orders through the mail. In referring to representations concerning the product, it characterizes them as virtually fraudulent. It declares that Begimen is still obtainable over the counter, ‘ ‘ where postal authorities have no jurisdiction ”, although under investigation by the Federal Trade Commission. It should be noted that Wonder Drug Corporation is not mentioned in this context. The plaintiff alleges that it has expended $2,000,000 to exploit Begimen through various advertising media; that it has been identified with its product by the wholesale and retail drug trade; that its name and reputation and that of Begimen have [287] been gravely injured and damaged; and that its advertisements have been rejected. We do not consider Marlin Fire Arms Co. v. Shields (171 N. Y. 384) applicable here. The Court of Appeals in that case, which sought injunctive relief, pointed out (pp. 389, 390) that the complaint did not allege any statement .militating against the character or conduct of the plaintiff, nor did it charge that the plaintiff was guilty of any deceit in the vending of its product. That is not the situation in this case. The gist of the article permits the conclusion that the misrepresentations with respect to Begimen are of such a nature as to constitute a fraud upon the public, and that the manufacturer is guilty of fraud and deceit. In Reporters’ Assn. v. Sun Print & Pub. Assn. (186 N. Y. 437, 441), the Court of Appeals said: “ There has been some dispute in the cases as to the necessity of setting out the specific damage, which a corporation claims to have suffered from a libelous publication; but T regard the better rule to be that such an averment is not necessary, when the language is of so defamatory a nature as to directly affect credit and to occasion pecuniary injury. ’ ’ If the entire article read as a whole, in its ordinary meaning, was naturally and proximately injurious to the plaintiff, it will be presumed, without any proof, that its credit and reputation were impaired thereby (O’Connell v. Press Pub. Co., 214 N. Y. 352, 358). The rule is well stated in Samson United Corp. v. Dover Mfg. Co. (233 App. Div. 155, 156) quoting from L. R. A. (vol. 52, p. 526): “ ‘ An action of libel may be maintained by a corporation where the character or condition of its marketable products is misrepresented, or where the libel relates to its business so as to affect the confidence of the public and drive away its customers, or where the libel affects its credit in the community and weakens the public confidence so that it is more difficult to obtain credit or borrow money. It seems that in none of these cases is it necessary to allege special damage where the obvious effect of the libel would be to ruin the business. ’ ’ ’ Under the circumstances, it should be held that the complaint is sufficient, and the order at Special Term should be affirmed on the law, with costs to the respondent.