New York Law Review

Tag: Innuendo

  • Wilke, Davis, Mitchell Planning, Inc. v. HRH Constr. Corp., 41 N.Y.2d 106 (1976): Defamation by Innuendo in Business Communications

    Wilke, Davis, Mitchell Planning, Inc. v. HRH Constr. Corp., 41 N.Y.2d 106 (1976)

    A communication that is not defamatory on its face cannot be the basis for a defamation action unless the innuendo it allegedly creates is reasonably apparent and supports a defamatory meaning.

    Summary

    Wilke, Davis, Mitchell Planning, Inc. (Plaintiff), an interior decorator, sued HRH Construction Corp. (Defendant) for defamation based on a letter Defendant sent to Plaintiff’s clients. The letter informed clients that Defendant was the assignee of accounts receivable from Computer & Office Equipment Corp. and that payments should be made directly to Defendant, not Plaintiff. Plaintiff claimed the letter implied it was not paying its bills. The court held that the letter was not defamatory as a matter of law because it merely announced a standard business practice of assigning accounts receivable, and that such an announcement may not reasonably be taken as an indication that those involved are in financial difficulties.

    Facts

    Plaintiff purchased office equipment from Computer & Office Equipment Corp. for its clients, who received the equipment directly, though Plaintiff was billed. Computer assigned its accounts receivable to Defendant, who then sent letters to Computer’s customers, including Plaintiff’s clients, instructing them to pay Defendant directly. Although Plaintiff claimed to have paid Computer, Defendant’s records indicated otherwise. Plaintiff alleged that the letter to its clients defamed its business by implying it was not paying its bills.

    Procedural History

    Plaintiff sued Defendant for defamation. The lower court ruled in favor of Plaintiff. The appellate court reversed, finding the letter not defamatory as a matter of law. The New York Court of Appeals granted leave to appeal to review this decision.

    Issue(s)

    Whether a letter informing a party’s clients of an assignment of accounts receivable, and directing payment to the assignee, is defamatory by innuendo when the letter does not explicitly state that the party is failing to pay its bills.

    Holding

    No, because the letter is merely a routine announcement of a common business practice and does not reasonably imply financial difficulties or a failure to pay bills.

    Court’s Reasoning

    The court reasoned that the letter, though awkwardly worded, simply announced the assignment of accounts receivable, a common business practice. “The possible reasons for such an assignment are manifold, and such an announcement may not reasonably be taken as an indication that those involved are in financial difficulties.” The court emphasized that allowing such a letter to form the basis of a defamation action would unduly burden essential financing practices. While acknowledging that the letter might potentially support a different cause of action (e.g., interference with contract), the court concluded that it was not defamatory. The court stated that “[t]he determination whether statements which are not defamatory on their face may in fact be defamatory because of the use of innuendo is one which must be made by the court.” The court implied that such a determination should be carefully considered to avoid hindering legitimate business practices.