S.E. 2d
THE STATE OF SOUTH CAROLINA
In The Supreme Court
Swinton Creek Nursery
and James M. Futch III, Petitioners
v.
Edisto Farm Credit,
ACA, E, Lawton Huggins
and Jerry S. Bishop, Defendants,
of whom Edisto Farm
Credit, ACA, is Respondent.
ON WRIT OF CERTIORARI
Appeal From Berkeley County
Marc H. Westbrook, Circuit Court Judge
Opinion No. 24910
Heard January 7, 1999 - Filed March 1, 1999
AFFIRMED IN PART; REVERSED IN PART.
G. Thomas Hill, of Hill, Hill, & Hill, of Johns Island, for
petitioners.
Marvin C. Jones and Jennifer E. Duty, of Bogoslow &
Jones, P.A., of Walterboro, for respondent.
TOAL, A.J.: In this case, we granted a petition for a writ of certiorari to
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review the Court of Appeals' opinion in Swinton Creek Nursery v. Edisto
Farm Credit, ACA, 326 S.C. 426, 483 S.E.2d 789 (Ct. App. 1997). We affirm in part,
reverse in part, and remand.
FACTUAL/PROCEDURAL BACKGROUND
In 1980, James M. Futch, III, ("Owner") began a nursery business near
the small town of Hollywood, South Carolina.1 As a result of his efforts, Owner
created the Swinton Creek Nursery ("Swinton Creek"). Swinton Creek was
mainly a wholesale operation that sold azaleas to such stores as Wal-Mart and
K-Mart
In an effort to expand the nursery, Owner borrowed $30,000 from the
South Atlantic Production Credit Association in November 1989. In April of
1991, South Atlantic Production Credit merged with several other credit
associations to become the Edisto Farm Credit ("EFC"). From April 1991
forward, Owner's loan was handled by EFC. Owner obtained his initial loan
from EFC's Summerville branch, which was managed by Jerry Bishop. As a
borrower, Owner also became a stockholder of EFC.2
In July of 1989, Owner became delinquent on his note with EFC. Bishop
requested that Owner pay the interest on the loan.3 Owner subsequently went
to see Bishop at his office in Summerville to discuss the default. EFC
ultimately agreed to renew the $30,000 principal on Owner's note to be due May
1, 1991. However, in May, Owner again went into default. Owner agreed to
make a payment of $8,000 and work on a plan to liquidate the assets of the
nursery to pay off his debt to EFC.
In late May of 1991, Owner encountered Durwood Collins, Sr., in a
convenience store on Edisto Island. Collins owned the pavilion at Edisto Beach
1 Owner's mother was also a partner in the nursery and helped with
operating the business.
2 Owner's rights as a member of EFC included voting for the board of
directors, sharing in the profits and earnings of the association, and applying
for loans.
3 Owner eventually complied, paying $2,404.10 for interest that had
accrued through February 27, 1990.
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and had known Owner since they were children. Owner told Collins that he
was thinking of liquidating or down-sizing some of Swinton Creek. Collins told
Owner that his son, Durwood Collins, Jr., ("Buyer") was graduating from college
and was interested in the nursery business. Collins asked Owner if he was
interested in selling all of Swinton Creek. Owner said no, but he would sell
some of Swinton Creek's assets and equipment to Buyer.
During the summer of 1991, Buyer began working for Owner at Swinton
Creek to learn the nursery business.4 Buyer also began negotiations with
Owner concerning the sale of Swinton Creek's assets. Owner and Buyer agreed
on a price of $97,500.5
In August of 1991, Buyer went with his father to EFC's Walterboro office
seeking a loan for the acquisition of Swinton Creek's assets and equipment. E.
Lawton Huggins was the senior loan officer at the Walterboro branch and
handled Buyer's loan application for EFC. As part of the application process,
Buyer provided Huggins with his financial statement, tax returns, and a
projected income statement of his proposed nursery.
In early September of 1991, Huggins received an appraisal of Swinton
Creek's equipment and nursery stock from William West, an EFC appraiser.
Huggins subsequently visited Swinton Creek to look at the equipment and
nursery stock and to re-check the serial numbers on West's appraisal. Huggins
testified he had a "side bar conversation" with Owner while visiting Swinton
Creek. Huggins stated that Owner inquired as to the time table for closing and
indicated that time was of the essence because he had other pressing financial
obligations, including a past due loan. Owner conceded Huggins visited
Swinton Creek, but denied having the "side bar conversation" with him at the
nursery.
On September 10, 1991, Huggins wrote a letter to Buyer concerning
Buyer's loan application. The fourth paragraph of the letter stated:
I would like to address . . . the weaknesses present due to your
limited financial strength and questionable repayment capacity.
Your limited asset base does not provide a tangible secondary
4 Buyer now operates Milton Creek Nursery on Edisto Island.
5 This price included a truck which Owner agreed to sell for $12,500.
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SWINTON CREEK NURSERY, et al v. EDISTO FARM CREDIT, et al.
source of repayment should the nursery fail to generate earnings as
projected. In other words, you have no assets which may be
converted in order to satisfy the obligation to my organization.
This is extremely important since the projected income for the
nursery is not supported by a successful earnings trend. In fact, the
operation you are purchasing has been under financial duress.
Your forecast for generating adequate earnings may materialize,
however, there is adequate risk for concern on my part.
Huggins testified that, in the letter, the "earning trend" comment was in
reference to Buyer's projected income for the nursery. Huggins claimed he had
no knowledge of Swinton Creek's earning trend and was only referring to
Buyer's trend. However, Huggins admitted the "financial duress" comment was
in reference to Swinton Creek. Huggins testified his comment was based solely
on his observations during his visit at Swinton Creek and his conversation with
Owner. Huggins further testified the letter was sent first class mail to Buyer
and was not copied to anyone else.
After receiving the letter, Buyer went to see Owner and explained that he
would be unable to purchase the assets of the nursery for the amount they had
originally agreed on. Buyer showed Owner the letter from Huggins and told
Owner that he did not believe he would be able to come up with the money.
Buyer eventually obtained a loan from EFC's Summerville branch6 and
purchased the Swinton Creek assets for $77,500 -- $20,000 less than originally
agreed on.7
Owner sued EFC, Huggins, and Bishop, alleging libel, slander, invasion
of privacy, interference with contract, interference with prospective economic
advantage, intentional infliction of emotional distress, breach of implied
covenant of good faith and fair dealing, and civil conspiracy. Before trial, the
trial court granted EFC's motion for summary judgment on the intentional
infliction of emotional distress claim. The other claims were preserved for trial.
6 Buyer's loan application was transferred from EFC's Walterboro branch
to the Summerville branch where it was handled by Lynn Danzler. The loan
application was approved after Buyer's father co-signed the loan.
7 The closing date for the purchase was October 17, 199 1. Owner testified
he felt pressure to close the deal because he needed to buy insurance before
November.
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At the close of plaintiff s case, the trial court directed a verdict for EFC on
the theories of civil conspiracy, slander, and breach of implied covenant of good
faith and fair dealing. In addition, the trial court, finding no evidence of
tortious action by Bishop, dismissed Bishop as a defendant in the case. At the
close of all the evidence, the trial court directed a verdict in favor of the
remaining defendants on the libel claim. Thus, only the claims of invasion of
privacy, interference with contract, and interference with prospective economic
advantage went to the jury.
The jury returned a verdict for defendants EFC and Huggins as to the
claims of interference with contract and interference with prospective economic
advantage, and for defendant Huggins on the claim of invasion of privacy, but
found that EFC was liable to Owner for invasion of privacy in the amount of
$55,000. Both Owner and EFC appealed. EFC argued the trial court erred by
not granting its directed verdict motion on the invasion of privacy claim.
Owner, on the other hand, argued the trial court should not have granted
directed verdicts on his claims for libel, civil conspiracy, and breach of implied
covenant of good faith and fair dealing. The Court of Appeals ruled in favor of
EFC on all arguments; the court reversed the trial court's failure to direct a
verdict on the invasion of privacy claim and affirmed the directed verdicts on
the other claims. Swinton Creek Nursery v. Edisto Farm Credit, ACA, 326 S.C.
426, 483 S.E.2d 789.
We granted Owner's petition for a writ of certiorari to consider the
following issues:
(1) Did the Court of Appeals err in reversing the trial court's denial
of EFC's motion for directed verdict on the invasion of privacy claim?
(2) Did the Court of Appeals err in affirming the trial court's grant of
EFC's motion for directed verdict on the libel claim?
(3) Did the Court of Appeals err in affirming the trial court's grant of
EFC's motion for directed verdict on the breach of implied covenant
of good faith and fair dealing claim?
LAW/ANALYSIS
In ruling on a motion for directed verdict, a court must view the evidence
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SWINTON CREEK NURSERY, et al v. EDISTO FARM CREDIT, et al.
and all reasonable inferences in the light most favorable to the non-moving
party. Quesinberry v. Rouppasong, 331 S.C. 589,503 S.E.2d 717 (1998); Gamble
v. International Paper Realty Corp., 323 S.C. 367, 474 S.E.2d 438 (1996). When
the evidence yields only one inference, a directed verdict in favor of the moving
party is proper. Id. The trial court can only be reversed by this Court when
there is not evidence to support the ruling below. Creech v. Wildlife & Marine
Resources Dep't, 328 S.C. 241 491 S.E.2d 571 (1997).
A. INVASION OF PRIVACY
Owner argues that the Court of Appeals erred in reversing the trial
court's denial of EFC's directed verdict motion on his invasion of privacy claim.
We disagree.
The origins of the tort of invasion of privacy are found in the famous law
review article written in 1890 by Samuel D. Warren and Louis D. Brandeis. See
Warren & Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890).8 In their
article, Warren and Brandeis advocated an extension of common law privacy
rights to protect individuals from what they saw as the advancing threat of a
gossip-consumed, technological society. See Jonathan P. Graham, Note,
Privacy, Computers, and the Commercial Dissemination of Personal
Information, 65 Tex. L. Rev. 1395, 1405 (1987)("Warren and Brandeis found the
legal basis for the right to privacy by coupling common-law doctrines with the
notion that technological advances and social changes had made it necessary
to recognize the new right."). Warren and Brandeis warned of new mechanical
devices which "threaten[ed] to make good the prediction that 'what is whispered
in the closet shall be proclaimed from the house-tops.'" Warren & Brandeis, 4
Harv. L. Rev. at 195. They therefore called for securing to the individual the
right "to be let alone."9 Id.
In Holloman v. Life Insurance Co. of Virginia, 192 S.C. 454, 7 S.E.2d 169
8 For a critical discussion of the Warren-Brandeis formulation see Diane
L. Zimmerman, Requiem For A Heavyweight: A Farewell to Warren and
Brandeis's Privacy Tort, 68 Cornell L. Rev. 291 (1983).
9 In 1960, Dean Prosser expanded upon the Warren-Brandeis discourse
by classifying invasion of privacy into four distinct causes of action. See
Prosser, Privacy, 48 Cal. L. Rev. 383 (1960). Prosser's classifications were
incorporated into and elaborated upon in the Restatement.
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SWINTON CREEK NURSERY, et al v. EDISTO FARM CREDIT, et al.
(1940), this Court for the-first time recognized the tort of invasion of privacy,
stating, "the right to privacy is correctly defined ... as the right to be let alone;
the right of a person to be free from unwarranted publicity." Holloman, 192
S.C. at 458, 7 S.E.2d at 171 (citation omitted). Later, in Meetze v. Associated
Press, 230 S.C. 330, 95 S.E.2d 606 (1957), this Court specified three distinct
causes of action for invasion of privacy:
[1] The unwarranted appropriation or exploitation of one's
personality, [21 the publicizing of one's private affairs with which
the public has no legitimate concern, or [31 the wrongful intrusion
into one's private activities, in such manner as to outrage or cause
mental suffering, shame, or humiliation to a person of ordinary
sensibilities.
Meetze, 230 S.C. at 335, 95 S.E.2d at 608 (quoting 41 Am. Jur. Privacy 2); see
Todd v. South Carolina-Farm Bureau Mut. Ins., 276 S.C. 284) 278 S.E.2d 607
(1981). The Court in Meetze further noted that truth is not a defense to an
action for invasion of privacy. Id.
Owner concedes his claim falls under the second cause of action specified
in Meetze. The elements of this tort include (1) publicizing, (2) absent any
waiver or privilege, (3) private matters in which the public has no legitimate
concern, (4) so as to bring shame or humiliation to a person of ordinary
sensibilities. See Meetze, supra; Tureen v. Equifax, Inc., 571 F.2d 411 (8th Cir.
1978). The Court of Appeals concluded the trial court should have granted
EFC's directed verdict motion because Owner's private affairs had not been
"publicized." Swinton Creek, 326 S.C. at 435, 483 S.E.2d at 795.
With regard to Owner's right of privacy claim, the two issues raised by
this appeal are: (a) whether the publicity element of this cause of action can be
satisfied by mere publication; and (b) whether publicity must be shown if there
is also a breach of confidential relationship.
1. Publicity
Though never directly addressed by this Court, our Court of Appeals has
consistently held that publicity, as opposed to mere publication, is what is
required to give rise to a cause of action for this branch of invasion of privacy;
communication to a single individual or to a small group of people will not give
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SWINTON CREEK NURSERY, et al v. EDISTO FARM CREDIT, et al.
rise to an invasion of privacy claim.10 See McCormick v. England, 328 S.C. 627,
494 S.E.2d 431 (Ct. App. 1997); Swinton Creek, supra; Snakenburg v. Hartford
Cas. Ins. Co., Inc., 299 S.C. 164, 383 S.E.2d 2 (Ct. App. 1989); Wright v.
Sparrow, 298 S.C. 469, 381 S.E.2d 503 (Ct. App. 1989); Rycroft v. Gaddy, 281
S.C. 119, 314 S.E.2d 39 (Ct. App. 1984).11 By defining "publicity" in this
manner, our Court of Appeals is in line with the majority of other jurisdictions."12
10 One commentator has suggested that this requirement ensures that
public communications comply with minimum standards of civility, while
liberating private communications from the threat of legal enforcement of such
restraints. Robert C. Post, The Social Foundations of Privacy: Community and
Self In The Common Law Tort, 77 Cal. L. Rev. 957 (1989).
11 In Rycroft, supra, the Court of Appeals borrowed this interpretation
directly from the federal district court decision in Harrison v. Humble Oil, 264
F. Supp. 89 (D.S.C. 1967). In Harrison, the plaintiff alleged that defendant's
communication to plaintiffs employer regarding a debt owed to defendant
constituted an invasion of privacy. The court, in finding no invasion of privacy,
stated:
It is an invasion of his rights to publish in a newspaper that the
plaintiff does not pay his debts, or to post a notice to that effect in
a window on the public street, or to cry it aloud in the highway, but
not to communicate the fact to the plaintiffs employer or to any
other individual, or even a small group . . . .
Harrison, 264 F. Supp. at 92 (emphasis added)(quoting Prosser, Law of Torts,
Right of Privacy 112 at 835 (3d ed. 1963)).
12 E.g., Tureen v. Equifax, Inc., 571 F.2d 411, 418 (8th Cir. 1978)("Except
in cases of physical intrusion, it has been held that the tort must be founded
upon publicity, in the sense of communication to the public in general or to a
large number of persons, as distinguished from one individual or a few.");
Satterfield v. Lockheed Missiles and Space Co., Inc., 617 F. Supp. 1359, 1370
(D.S.C. 1985)("The disclosure of private facts must be a public disclosure, and
not a private one; there must be, in other words, publicity."); Beard v. Akzona,
Inc., 517 F. Supp. 128, 133 (E.D. Tenn. 1981)( "'Publicity' . . . means that the
matter is made public, by communicating it to the public at large, or to so many
persons that the matter must be regarded as substantially certain to become
one of public knowledge."); Werner v. Kliewer, 710 P.2d 1250, 1256 (Kan.
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See Robert C. Post, The Social Foundations of Privacy: Community and Self In
The Common Law Tort, 77 Cal. L. Rev. 957 (1989). Many of these courts have
borrowed directly from the Restatement (Second) of Torts, which contains the
following discussion of "publicity:"
The form of invasion of the right of privacy covered in this Section
depends upon publicity given to the private life of the individual.
"Publicity," as it is used in this Section, differs from "publication,"
as that term is used in sec. 577 in connection with liability for
defamation. "Publication," in that sense, is a word of art, which
includes any communication by the defendant to a third person.
"Publicity," on the other hand, means that the matter is made
public, by communicating it to the public at large, or to so many
persons that the matter must be regarded as substantially certain
to become one of public knowledge. The difference is not one of the
means of communication, which may be oral, written or by any
other means. It is one of a communication that reaches, or is sure
to reach, the public.
Thus it is not an invasion of the right of privacy, within the
rule stated in this Section, to communicate a fact concerning the
plaintiffs private life to a single person or even to a small group of
persons. On the other hand, any publication in a newspaper or a
magazine, even of small circulation, or in a handbill distributed to
a large number of persons, or any broadcast over the radio, or
statement made in an address to a large audience, is sufficient to
give publicity within the meaning of the term as it is used in this
Section. The distinction, in other words, is one between private and
public communication.
The Restatement (Second) of Torts, 652D cmt. a, at 383 (1977).
In the instant case, the trial court, in denying EFC's motion for a directed
verdict, stated: "The plaintiff testified that various people had confronted him
about it, and again, obviously, there is a -- I grant you, there is a strong
question as to how it got out to anybody . . . but there is enough there, I think,
that it would be a jury issue." At trial, William Geraty testified that the word
on the street was that Owner was having problems with a bank. Owner also
1985)("it is not an invasion of the right of privacy . . . to communicate a [private
fact] to a single person or even to a small group of persons.").
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testified that numerous people had questioned him about the letter. As an
example, Owner stated that Nat Sanders, Bishop's cousin, asked him about it
once. Sanders did not testify at trial.
In their article, The Right to Privacy, Warren and Brandeis were
primarily concerned with new mechanical devices that would catapult once
private gossip into the public domain. See Warren & Brandeis, 4 Harv. L. Rev.
at 196 ("When personal gossip attains the dignity of print, and crowds the space
available for matters of real interest to the community, what wonder that the
ignorant and thoughtless mistake its relative importance."). They clearly did
not advocate abolishing entirely personal correspondences, whether written or
oral. As originally conceived by Warren and Brandeis, public disclosure of
private facts requires disclosure akin to publications in mass-media. In the
instant case, there is no-evidence that EFC published the contents of the letter
to anyone other than Buyer. The letter was sent only to Buyer in an attempt
to address his loan application. We find no evidence to support a claim for
public disclosure of private facts.
Owner nevertheless argues that EFC should be liable for "sparking the
flame" of publicity. In other words, even if EFC published the statement to only
one person, if the information eventually became public, EFC should be held
accountable. However, such an approach would effectively eviscerate the
requirement that the defendant be the one to have publicized the private
information. If this approach were adopted, almost any form of gossip would be
actionable, regardless of the discretion taken in its initial communication. We
therefore affirm the Court of Appeals on this issue.
2. Confidential Relationship
In Rycroft v. Gaddy, 281 S.C. 119, 314 S.E.2d 39 (Ct. App. 1984), the
Court of Appeals held, "Communication to a single individual or to a small
group of people, absent a breach of contract, trust or other confidential
relationship, will not give rise to liability." Rycroft, 281 S.C. at 124, 314 S.E.2d
at 43 (emphasis added)., Based on this language, Owner argues that a plaintiff
need not prove publicity in an invasion of privacy claim if there is a breach of
contract, trust, or other confidential relationship. We disagree.
Recently, in McCormick v. England, 328 S.C. 627, 494 S.E.2d 431 (Ct.
App. 1997), our Court of Appeals held: "'A confidential relationship is breached
if unauthorized disclosure is made to only one person not a party to the
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SWINTON CREEK NURSERY, et al v. EDISTO FARM CREDIT, et al.
confidence, but the right of privacy does not cover such a case.'" McCormick, 328
S.C. at 641,494 S.E.2d at 438 (emphasis added) (quoting Alan B. Vickery, Note,
Breach of Confidence: An Emerging Tort, 82 Colum. L. Rev. 1426, 1442 (1982)).
Under this view, breach of contract or confidentiality does not give rise to an
exception to the "publicity" requirement for the tort of invasion of privacy.
In the instant case, the Court of Appeals observed that the language in
Rycroft, supra, derived from the federal district court case of Harrison v.
Humble Oil, 264 F. Supp. 89 (D.S.C. 1967). Harrison, in turn, quoted from
Prosser's third edition of the Law of Torts. See Prosser, Law of Torts, Right of
Privacy 112 at 835 (3d ed. 1963). The court emphasized that Harrison and
Prosser described "breach of contract, trust or other confidential relationship"
as an "independent basis" of relief. In other words, though the facts of a case
may give rise to a breach of contract or confidentiality claim, that does not
excuse the requirement that the private information be "publicized" in order to
maintain an invasion of privacy claim.
We agree with the Court of Appeals' interpretation on this point. In their
article, Warren and Brandeis characterized the relationship between breach of
contract or confidentiality and invasion of privacy in the following manner:
This process of implying a term in a contract, or of implying a trust
(particularly where the contract is written, and where there is no
established usage or custom), is nothing more nor less than a
judicial declaration that public morality, private justice, and
general convenience demand the recognition of such a rule, and
that the publication under similar circumstances would be
considered an intolerable abuse. . . . But the court can hardly stop
there. The narrower doctrine may have satisfied the demands of
society at a time when the abuse to be guarded against could rarely
have arisen without violating a contract or a special confidence; but
now that modern devices afford abundant opportunities for the
preparation of such wrongs without any participation by the
injured party, the protection granted by law must be placed upon
a broader foundation [of invasion of privacy].
Warren & Brandeis, 4 Harv. L. Rev. at 210-11.
Although related in policy, breach of confidentiality and invasion of
privacy are not so closely connected in law that the presence of the former
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obviates proof of "publicity" in the latter.13 Warren and Brandeis envisaged a
privacy right that would occupy ground not already covered by contract and
confidentiality theories. In this sense, if a plaintiff has a claim for breach of
contract or confidentiality, there is no justification for reviving an otherwise
invalid invasion of privacy claim.14 We therefore affirm the Court of Appeals on
this issue.
B. DEFAMATION
Owner argues the trial court erred in granting EFC's motion for a directed
verdict concerning his defamation claim. We agree.
At trial, EFC moved for a directed verdict on Owner's defamation claim,
arguing it was protected by a qualified privilege. The trial court granted the
motion. The Court of Appeals affirmed the trial court's ruling.
The tort of defamation allows a plaintiff to recover for injury to his or her
reputation as the result of the defendant's communications to others of a false
message about the plaintiff. Holtzscheiter v. Thompson Newspapers, Inc., 332
S.C. 502, 506 S.E.2d 497 (1998). Defamatory communications take two forms:
13 See Joseph Glenn White, Note, Physician's Liability for Breach of
Confidentiality: Beyond The Limitations of The Privacy Tort, 49 S.C. L. Rev.
1271 (1998)(distinguishing between breach of confidentiality and invasion of
privacy and ' arguing the former is better equipped to protect patients from the
disclosure of personal facts by their doctors).
14 Additionally, breach of confidentiality and invasion of privacy are torts
that encompass different doctrinal limitations. See Vickery, 82 Colum. L. Rev.
at 1440 ("Privacy's doctrinal limits are . . . unnecessary in breach-of-confidence
situations, and should not bar recovery to plaintiffs deserving of a remedy.").
For instance, "[d]isclosure in breach of confidence or other duty may cover
greater ground than a pure privacy case, since the duty of confidence . . . may
include facts that are not 'private' in the ordinary sense and the disclosure may
not be 'public.'" Prosser & Keeton, Law of Torts, Right of Privacy 117, at 121,
n.6.5 (Supp. 1988). Moreover, unlike breach of confidentiality, the privacy
standard focuses on the content of the publication, rather than its source. See
McCormick, 328 S.C. 627, 494 S.E.2d 431. Thus, it is irrelevant in a breach of
confidentiality claim whether the disclosure of the information would bring
shame to a person of ordinary sensibilities.
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libel and slander. Slander is a spoken defamation while libel is a written
defamation or one accomplished by actions or conduct. Id. If a communication
is libelous, then the law presumes the defendant acted with common law malice.
Id.
In a defamation action, the defendant may assert the affirmative defense
of conditional or qualified privilege. Under this defense, one who publishes
defamatory matter concerning, another is not liable for the publication if (1) the
matter is published upon an occasion that makes it conditionally privileged, and
(2) the privilege is not abused. Restatement (Second) of Torts, 593 (1977); see
Bell v. Bank of Abbeville, 208 S.C. 490) 38 S.E.2d 641 (1946). In Bell, this Court
held:
In determining whether or not the communication was qualifiedly
privileged, regard must be had to the occasion and to the
relationship of the parties. When one has an interest in the subject
matter of a communication, and the person (or persons) to whom it
is made has a corresponding interest, every communication
honestly made, in order to protect such common interest, is
privileged by reason of the occasion. The statement, however, must
be such as the occasion warrants, and must be made in good faith
to protect the interests of the one who makes it and the persons to
whom it is addressed.
Bell, 208 S.C. at 493-94, 38 S.E.2d at 643. Where the occasion gives rise to a
qualified privilege, there is a prima facie presumption to rebut the inference of
malice, and the burden is on the plaintiff to show actual malice or that the scope
of the privilege has been exceeded. Fulton v. Atlantic Coast Line R. Co., 220
S.C. 287, 67 S.E.2d 425 (1951); 53 C.J.S. Libel and Slander 79 (1987).
To prove actual malice, the plaintiff must show that the defendant was
activated by ill will in what he did, with the design to causelessly and wantonly
injure the plaintiff; or that the statements were published with such
recklessness as to show a conscious disregard for plaintiffs rights.
Holtzscheiter, supra. In addition, "the person making [the defamatory
statement] must be careful to go no further than his interests or his duties
require.... And the fact that a duty, a common interest, or a confidential
relation existed to a limited degree, is not a defense, even though the publisher
acted in good faith." Fulton, 220 S.C. at 297,67 S.E.2d at 429; accord Woodward
v. South Carolina Farm Bureau Ins. Co., 277 S.C. 29, 282 S.E.2d 599 (1981).
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In general, the question whether an occasion gives rise to a qualified or
conditional privilege is one of law for the court. 50 Am. Jur. 2d Libel and
Slander 276 (1995). However, the question whether the privilege has been
abused is one for the jury. Id. Factual inquiries, such as whether the
defendants acted in good faith in making the statement, whether the scope of
the statement was properly limited in its scope, and whether the statement was
sent only to the proper parties, are generally left in the hands of the jury to
determine whether the privilege was abused. Id.; see also Restatement (Second)
of Torts 599-610. In Fulton, this Court held that it was a question for the
jury to determine if the publication went beyond what the occasion required and
was unnecessarily defamatory. Fulton, 220 S.C. at 297, 67 S.E.2d at 429; cf
Woodward, 277 S.C. at 32-33, 282 S.E.2d at 601 ("While abuse of privilege is
ordinarily an issue for the jury. . . . in the absence of a controversy as to the
facts . . . it is for the court to say in a given instance whether or not the privilege
has been abused or exceeded.").
In the instant case, the defamatory communication took the form of libel.
Thus, malice was presumed, and it was defendant's burden to establish that a
privilege existed in order to rebut this presumption. When Huggins was asked
why he made the "financial duress" comment, he stated: "I felt like it was part
of my responsibility to an inexperienced applicant, who obviously could not see
the risk associated with enterprise in which he was beginning." In granting the
directed verdict as to conditional privilege, the trial court made the following
conclusions: first, there was no evidence that Huggins wrote the letter in bad
faith; second, EFC was trying to protect its own interest in the letter; third, the
letter was written for the limited purpose of assisting Buyer with obtaining a
loan; and fourth, the comments were made on the proper occasion and in the
proper manner. The Court of Appeals affirmed the trial court's determination
that, as a matter of law, the occasion gave rise to a conditional privilege and the
privilege was not abused.
Assuming the occasion did give rise to a conditional privilege, we believe
a question existed for the jury as to whether the privilege was exceeded or
abused. First, the scope of the privilege extended only as far as EFC's interests
and duties required. See Fulton, supra. It is questionable whether a specific
comment about Swinton Creek's financial status was required to protect any
interest or duty covered by the privilege. EFC contends it wrote the letter for
the sole purpose of guiding Buyer into a successful loan application. Yet, Buyer
was only seeking to buy some of Owner's assets, not the entire Swinton Creek
operation. Moreover, if EFC wanted to convey to Buyer the difficulties of
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SWINTON CREEK NURSERY, et al v. EDISTO FARM CREDIT et al.
running a nursery in a small town, it could have simply made a general
statement without specifically referring to Owner. Thus, even if EFC acted in
good faith to assist Buyer, the jury might conclude that the "financial duress"
comment was unnecessarily defamatory under these circumstances.
Additionally, there was evidence suggesting EFC acted in reckless
disregard of Owner's rights so as to constitute actual malice. See Holtzscheiter,
supra. Huggins testified that the financial duress comment was based solely
on his observations of Swinton Creek and his "side bar conversation" with
Owner. However, Owner denied having any conversation with Huggins at the
nursery. Further, even if a conversation did take place, EFC had a banking
relationship with Owner at the time Huggins visited Swinton Creek. These are
all factors relevant in determining whether there was actual malice.
We conclude the directed verdict should not have been granted and
reverse the Court of Appeals on this issue.
C. IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
Owner argues the trial court erred in granting EFC's motion for directed
verdict regarding the claim of breach of implied covenant of good faith and fair
dealing. We disagree.
The Court of Appeals affirmed the trial court's determination that Owner
could not proceed on his implied covenant of good faith and fair dealing claim
because he was in default on the contract. See Parks v. Lyons, 219 S.C. 40, 48,
64 S.E.2d 123, 126 (1951)("one who seeks to recover damages for breach of a
contract, to which he was a party, must show that the contract has been
performed on his part, or at least that he was, at the appropriate time, able,
ready, and willing to perform it."). It is uncontested that in May of 1991, Owner
went into default on his note with EFC. We conclude the Court of Appeals is
correct on this point.
Owner nevertheless argues that he still has a claim under his contractual
relationship with the bank as a stockholder. This argument is without merit
because Owner's status as a stockholder is based upon his relationship with
EFC as a borrower. And as a borrower, Owner clearly failed to fulfill his
obligations under the contract. We therefore affirm the Court of Appeals on this
issue.
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SWINTON CREEK NURSERY, et al v. EDISTO FARM CREDIT, et al.
CONCLUSION
Based on the foregoing, we AFFIRM the Court of Appeals on the issues
of invasion of privacy and implied covenant of good faith and fair dealing, but
REVERSE on the libel issue
FINNEY, C.J., MOORE, WALLER, and BURNETT, JJ., concur.
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