partnership when the bad debt reserve was originally taken as a deduction from income. There would be a double benefit to the partnership if securities were issued covering the face amount of the receivables. We do not, however, understand how there can be a "recovery" of the benefit of the bad debt reserve when the receivables are transferred less the reserve. That merely perpetuates the status quo and does not tinker with it for any double benefit out of the bad debt reserve.

5

For these reasons, the Court of Appeals in the Schmidt case held that although the "need" for the reserve ended with the transfer, the end of that need did not mark a "recovery" within the meaning of the tax benefit cases, 355 F. 2d, at 113. We agree and accordingly reverse the judgment below.

Reversed.

MR. JUSTICE BLACK and MR. JUSTICE STEWART, dissenting.

We agree with the reasoning of Judge Tuttle's opinion for the Court of Appeals in this case, 414 F. 2d 627, and with Judge Raum's opinion for the Tax Court in Schuster v. Commissioner, 50 T. C. 98. Accordingly, we would affirm the judgment.

5 "[T]he infirmities in the accounts receivable which justify the bad debt reserve carry over to those accounts in the hands of the corporation. Presumably the amount that will ultimately be collected by the corporation will not be the gross amount of the receivables, but rather the net amount after deducting the bad debt reserve. Thus, the stock received in exchange for such accounts receivable can only be worth what the receivables themselves are worth, namely, the net collectable amount rather than the gross amount." Arent, Reallocation of Income and Expenses in Connection with Formation and Liquidation of Corporations, 40 Taxes 995, 998 (1962).

6 N. 1, supra.

GREENBELT COOPERATIVE PUBLISHING
ASSN., INC., ET AL. v. BRESLER

CERTIORARI TO THE COURT OF APPEALS OF MARYLAND

No. 413. Argued February 24-25, 1970-
Decided May 18, 1970

At public meetings before the Greenbelt, Maryland, City Council, the efforts of respondent, a prominent real estate developer and state legislator, to secure zoning variances for certain land he owned while the city was trying to acquire other land of his on which to build a school were vigorously discussed. In publishing in their newspaper full accounts of the meetings, petitioners reported that various citizens had characterized respondent's negotiating position as "blackmail." Respondent, concededly a "public figure," brought this libel action against petitioners for publishing the reports notwithstanding their knowledge that he had not committed the crime of blackmail. The trial judge instructed the jury that respondent could recover if petitioners' publications had been made with malice (defined as including "spite, hostility, or deliberate intention to harm") or reckless disregard of whether they were true or false, and that malice could be found from the "language" of the publication itself. The jury found for respondent, and the judgment was affirmed on appeal. Held:

1. The trial court's instructions, which permitted the jury to find liability merely on the basis of the reported hostile remarks made during a debate on a public issue, violated the First Amendment as made applicable to the States by the Fourteenth Amendment, whether respondent is considered to be a "public official" or a "public figure." New York Times Co. v. Sullivan, 376 U. S. 254; Curtis Publishing Co. v. Butts, 388 U. S. 130. Pp. 8-11.

2. In the circumstances of this case, where it is undisputed that petitioners' reports of the meetings were accurate, the word "blackmail" was not slanderous when spoken, or libelous when reported by petitioners, as there is no evidence whatsoever that the word was used to impute a crime to respondent or was intended as more than a vigorous epithet. Pp. 11-14.

253 Md. 324, 252 A. 2d 755, reversed and remanded.

6

Opinion of the Court

Roger A. Clark argued the cause and filed briefs for petitioners.

Abraham Chasanow argued the cause for respondent. With him on the brief was Howard S. Chasanow.

MR. JUSTICE STEWART delivered the opinion of the Court.

The petitioners are the publishers of a small weekly newspaper, the Greenbelt News Review, in the city of Greenbelt, Maryland. The respondent Bresler is a prominent local real estate developer and builder in Greenbelt, and was, during the period in question, a member of the Maryland House of Delegates from a neighboring district. In the autumn of 1965 Bresler was engaged in negotiations with the Greenbelt City Council to obtain certain zoning variances that would allow the construction of high-density housing on land owned by him. At the same time the city was attempting to acquire another tract of land owned by Bresler for the construction of a new high school. Extensive litigation concerning compensation for the school site seemed imminent, unless there should be an agreement on its price between Bresler and the city authorities, and the concurrent negotiations obviously provided both parties considerable bargaining leverage.

These joint negotiations evoked substantial local controversy, and several tumultuous city council meetings were held at which many members of the community freely expressed their views. The meetings were reported at length in the news columns of the Greenbelt News Review. Two news articles in consecutive weekly editions of the paper stated that at the public meetings some people had characterized Bresler's negotiating position as "blackmail." The word appeared several times,

both with and without quotation marks, and was used once as a subheading within a news story.1

Bresler reacted to these news articles by filing the present lawsuit for libel, seeking both compensatory and punitive damages. The primary thrust of his complaint was that the articles, individually and along with other items published in the petitioners' newspaper, imputed to him the crime of blackmail. The case went to trial, and the jury awarded Bresler $5,000 in compensatory damages and $12,500 in punitive damages. The Maryland Court of Appeals affirmed the judgment. 253 Md. 324, 252 A. 2d 755. We granted certiorari to consider the constitutional issues presented. 396 U. S. 874.

In New York Times Co. v. Sullivan, 376 U. S. 254, we held that the Constitution permits a "public official" to recover money damages for libel only if he can show that the defamatory publication was not only false but was uttered with "actual malice'-that is, with knowledge that it was false or with reckless disregard of whether it was false or not." Id., at 280. In Curtis Publishing Co. v. Butts, 388 U. S. 130, we dealt with the constitutional restrictions upon a libel suit brought by a "public figure."

In the present case Bresler's counsel conceded in his opening statement to the jury that Bresler was a public figure in the community. This concession was clearly correct. Bresler was deeply involved in the future development of the city of Greenbelt. He had entered into agreements with the city for zoning variances in the past, and was again seeking such favors to permit the construction of housing units of a type not contemplated in the original city plan. At the same time the city was trying to obtain a tract of land owned by Bresler for the purpose

1 The relevant portions of these news articles are printed as an appendix to this opinion.

6

Opinion of the Court

of building a school. Negotiations of significant public concern were in progress, both with school officials and the city council., Bresler's status thus clearly fell within even the most restrictive definition of a "public figure." Curtis Publishing Co. v. Butts, supra, at 154-155 (opinion of HARLAN, J.). See also Pauling v. Globe-Democrat Publishing Co., 362 F. 2d 188, 195–196, cert. denied, 388 U. S. 909.

Whether as a state legislator representing another county, or for some other reason, Bresler was a "public official" within the meaning of the New York Times rule is a question we need not determine. Cf. Time, Inc. v. Hill, 385 U. S. 374, 390; Rosenblatt v. Baer, 383 U. S. 75, 86 n. 12. For the instructions to the jury in this case permitted a finding of liability under an impermissible constitutional standard, whichever status Bresler might be considered to occupy. In his charge to the members of the jury, the trial judge repeatedly instructed them that Bresler could recover if the petitioners' publications had been made with malice or with a reckless disregard of whether they were true or false. This instruction was given in one form or another half a dozen times during the course of the judge's charge.'

2 The following excerpts from the trial judge's charge are illustrative:

"Accordingly

you must find for the defendant on the issue of fair comment, unless you determine by a preponderance of the evidence that the comment or criticism was published with

malice or a reckless disregard of whether it was true or false.

". . . And such statements repeated and/or published, unless with actual malice, or knowledge that they are false, reckless disregard for whether they are true or false, is not libel.

"The law recognizes the importance of free discussion and criticism and matters of public interest to the extent that it grants immunity even with respect to the publication of foolish and prejudicial criticism if they are not published with malice, knowledge