had little if any net worth, a consistent history of loss, a consistent history of dwindling sales, a consistent history of lateness in paying accounts, and the assignment of its accounts receivable.
Plaintiff corporation was essentially a one man corporation engaged in sales of brick products. Plaintiff's president was an employee of the former corporation whose mortgage and change of corporate name led to the confusion of names involved here. He and the proprietor of the former business founded a new corporation which bought the business assets of the old. Plaintiff was a minority stockholder, but after a year of operation disagreements arose, and the majority shareholder was bought out by stock redemption using capital of plaintiff corporation and by a peculiar salary bonus arrangement supported in part by profits in 1958, the sole good year. Plaintiff's president participated in a substantial bonus at the same time, and has been the sole or principal stockholder since. Thereafter sales declined, there was no profit, but plaintiff's president continued to draw his salary. When plaintiff corporation ceased to do business plaintiff's president went to work as a salesman for one of its former suppliers and has done well. Plaintiff's president attempted initially to conduct this lawsuit in the name of the corporation and it was only after compulsion of court order that the state appointed receiver for the benefit of creditors, who had received a general assignment of the corporation's assets, was made the real party plaintiff, although the trial was conducted by plaintiff's original trial counsel.
We do not regard the evidence of damages suffered by the receiver's sale of assets over a year later at less than their claimed value to be of much value. There is no evidence to support the correctness of the values claimed, and no evidence to show diligence on the part of the receiver. We believe that this evidence is too remote and speculative to have any probative value on the issue of damages, particularly in view of the corporation's history of business decline.
Plaintiff has alleged loss of credit as a result of the erroneous report. This makes his claim actionable per se and entitles him to general damages on proof that credit was so restricted. Regardless of whether loss of credit was actually proven, which we will consider later, we do not believe that loss of credit of a business firm, standing alone, is proof of damages, unless it connects itself with some tangible pecuniary loss of which it is the cause. Eckel v. Murphey, 15 Pa. 488, 495 ; Smith v. Western Union Telegraph Co., 150 Pa. 561, 564, 24 A. 1049 .
On the basis of the foregoing, assuming plaintiff to have met the burden of proof on the other elements required of it, we find the damages awarded grossly excessive, unsupported by evidence, inconsistent with the finding of no special damages, and subject to the prejudicial influence of improper argument of plaintiff's counsel.
In the first trial of this case the trial court, as a result of arguments on pretrial motions, held that the publication in question, a mercantile report containing an erroneous item reporting the entry of a judgment against plaintiff, constituted a libel per quod which required the proof of special damages. Although defendant had raised the objection that special damages had not been pleaded with particularity, as required by Pennsylvania law, and the Federal Rules of Civil Procedure, the court held that in view of the extensive discovery that had been conducted, defendant was informed as to the nature of the claim for damages, and denied the defendant's motion based on these grounds. We held that no general damages were allowable under such circumstances. [See 37 F.R.D. 460].
At no point did plaintiff raise the contention prior to trial, despite extensive pretrial arguments, that the report imputed insolvency and was thus libelous per se. No innuendo was pleaded to this effect. On the eve of trial, plaintiff's counsel for the first time stated that he expected to argue and submit evidence that the report imputed insolvency and would require no proof of special damages because an imputation of insolvency is a libel per se. This was overruled by the trial court which found no such imputation. After hearing plaintiff's case the court dismissed plaintiff's action for failure of proof of special damages. The Court of Appeals reversed this decision and remanded for a new trial. [ 367 F.2d 625].
We take the following guidelines from the opinion of the Court of Appeals as the law of the case:
1. "The plaintiff's allegation that defendant had 'erroneously' reported to plaintiff's creditors that a large judgment had been entered against it was actionable per se. The complaint clearly states that plaintiff's credit was injured as a result of the publication." (p. 629.)
2. "We read the report as not only imputing insolvency but demonstrating it: plaintiff's estimated liabilities (the liabilities column plus the $60,000 judgment) are reported as far exceeding its estimated assets. The report is, therefore, defamatory on its face." (pp. 630-631).