## Facts

- L. Payne operated a merchant store near the railroad depot area in Chattanooga and derived substantial business from railroad employees, including employees of the Western & Atlantic Railroad Company.
- Payne alleged the railroad and its Chattanooga general agent, J. C. Anderson, conspired to damage and ruin his business.
- Anderson, acting for the railroad, posted and circulated a notice that any railroad employee who traded with Payne would be discharged.
- Payne alleged the notice intimidated employees and others, causing many to stop buying from him and substantially harming his business.
- Payne did not allege the notice made false statements about his character or honesty, nor did he allege employees had fixed-term contracts or other limits on the railroad’s power to discharge them.

## Issues

1. Whether the notice constituted actionable libel or slander against Payne.
2. Whether announcing and implementing a policy of discharging employees for trading with a named merchant amounted to an unlawful act or other actionable tort.
3. Whether a lawful act, performed in a lawful manner, becomes actionable solely because it was motivated by malice and caused economic injury.

## Decision

- The Tennessee Supreme Court affirmed dismissal on demurrer.
- The notice was not libelous or slanderous because it did not assert defamatory facts about Payne.
- The railroad had the legal right to discharge at-will employees and to publish notice of the conditions on which it would exercise that right, absent breach of an employment contract.
- Because the threatened and actual discharges were lawful, the conduct could not be treated as “threats and intimidation” in the legal sense (which requires an unlawful act).
- Malicious motive did not convert the railroad’s otherwise lawful conduct into an actionable wrong.

## Legal Principles

- Corporations may be liable for torts of agents acting within the scope of authority, but liability requires an underlying tortious act.
- An employer’s notice forbidding employees from trading with a named merchant, backed by discharge, is not defamation where it contains no false, defamatory assertion about the merchant.
- In the absence of contractual limits on termination, an employer may discharge employees at will and may announce in advance when it will do so.
- “Threats and intimidation,” as a basis for tort liability, requires a threatened unlawful act; a threat to do what one has a legal right to do is not actionable.
- A lawful act, done in a lawful manner, is not actionable merely because it is motivated by malice and causes harm.

## Conclusion

The court held that Payne stated no cause of action because the railroad’s threatened discharge of at-will employees for trading with him, and its publication of that policy, were lawful acts that did not become tortious or defamatory simply because they were allegedly intended to injure his business.


Payne v. W. & Atl. R.R. Co., 81 Tenn. 507 (Tenn. 1884)