By Emilie Lounsberry, Inquirer Staff Writer

A Common Pleas Court jury yesterday found that State Supreme Court Justice James T. McDermott was not libeled by a 1983 Inquirer series, but in a seemingly inconsistent decision it awarded him $6 million in damages after concluding that a reprint of the same material was false.

 At issue were portions of the series, written by reporter Daniel R. Biddle and titled "Above the Law," that questioned the ethical conduct of members of the state Supreme Court, including McDermott.

The jury, which deliberated for about nine hours after a trial that lasted seven weeks, found that every portion of the series challenged by McDermott was true, and it exonerated The Inquirer in a lawsuit focusing on the publication of the series in May 1983.

 It then decided, however, that the identical sections were false in a reprint of the series and awarded McDermott $3 million each in compensatory and punitive damages.

McDermott had filed two suits against the newspaper, one for the original series, published May 15-17, 1983, and one for the reprint after The Inquirer sent copies to the 1984 conference in Las Vegas of the American Judicature Society and the American Bar Association.

 Inquirer attorney William T. Hangley said of the verdict: "It makes no sense whatsoever. . . . The words can't become false once having been true simply because they're wrapped in a different package."

 He said he would ask Common Pleas Court Judge John Lavelle of Carbon County to set aside the verdict.

 McDermott said it would be inappropriate to comment while the case "is still in the courts."

 His attorney, James E. Beasley, said he believed the jury concluded that The Inquirer knew portions of the series were false "when they did the tabloid and yet they went ahead, and that's what the verdict is about."

 Maxwell E. P. King, editor and executive vice president of The Inquirer, said the newspaper will ask that the verdict be "set aside."

He said: "We believe all the articles were truthful, fair and accurate. . . .

 "The jury has found the articles to be truthful when we published them, but false when we issued a reprint. If a newspaper cannot republish truthful stories about the public performance of a public official, the First Amendment stands in grave danger.

 " . . . Of course, The Philadelphia Inquirer will continue the most vigorous reporting of public issues and public officials."

 Biddle, whose colleagues greeted him in the Inquirer newsroom with a standing ovation when he returned from the courtroom, said: "My stories were true when we published them and they were true when we reprinted them and the truth of them was proven over and over in the courtroom."

One juror, who would not be identified, said only that "the trial was very hard for all of us."

The verdict came at about 3:15 p.m., some four hours after the nine-member jury sent a message asking Lavelle what would happen if eight of the jurors - the number required for a verdict - could not reach agreement.

Lavelle, specially appointed by the state Supreme Court to hear the case, answered that the case would end in a mistrial and would have to be retried. ''It's very important now that you are deliberating that you try to reach a verdict," he said.

Lavelle had told the jury in his instructions that, to find in favor of McDermott, they would have to conclude four things:

That the articles defamed McDermott; that the articles were false; that The Inquirer either knew the articles were false when it published them, or recklessly disregarded whether they were false, and that McDermott was harmed by the articles.

 If McDermott failed to prove all four elements, Lavelle told the jurors, they would have to return a verdict for The Inquirer.

 The jury found that in the original series, the sections about McDermott were defamatory but true - meaning McDermott was not libeled.

 The jury then found that McDermott had proved all four elements about the reprint.

 SPRAGUE AWARD

 The verdict came seven months after another jury awarded lawyer Richard A. Sprague $34 million in libel damages resulting from a 1973 story in The Inquirer that questioned Sprague's handling of a homicide case when he was a top prosecutor in the Philadelphia District Attorney's Office. Sprague also was represented by Beasley. The verdict is being appealed.

 Yesterday's verdict came after a sometimes dramatic trial in which McDermott asserted that the articles had falsely implied he was corrupt, and Biddle and The Inquirer defended their truthfulness, accuracy and fairness.

 The trial, a classic First Amendment battle, involved two of the state's titans - The Inquirer, which has won 17 Pulitzer Prizes since 1975, and McDermott, a one-time congressional, City Council and mayoral candidate who was a Common Pleas Court judge in Philadelphia for 16 years before his 1981 election to the Supreme Court.

It also involved two talented lawyers with strikingly different styles. Beasley, McDermott's attorney, known for tireless cross-examination and careful preparation, was passionate as he denounced The Inquirer and rapidly fired out questions in a voice than commanded attention.

From the moment he walked into the courtroom each morning, his white hair neatly trimmed, his suits well-tailored, Beasley was all business, studying his notes and seldom speaking to anyone.

Hangley, The Inquirer's attorney, less combative and seemingly less intense, was more the counter-fighter, trying to interrupt the barrage of questions from Beasley with a well-timed objection or a sharp comment.

Tall and distinguished by a shock of thick gray hair, Hangley conferred frequently during breaks with two colleagues and smiled with satisfaction whenever anyone said he had scored a point.

CROWDED COURTROOM

From the start of the trial on Oct. 22, lawyers, journalists, and members of McDermott's staff streamed in and out of the austere, 12th-floor courtroom at 1601 Market St., some offering support for McDermott and others turning out in a show of support for Biddle and The Inquirer.

During closing arguments on Wednesday, more than 100 spectators jammed the stuffy, 35-seat courtroom, and many sat on air-conditioning vents or stood shoulder to shoulder in the rear of Room 1207.

In an energetic, staccato summation, Beasley argued that McDermott's reputation had been badly damaged by The Inquirer, and he urged the jury to award "substantial damages. . . ."

"Nobody has a right to assassinate someone's character based on the garbage that was printed by The Philadelphia Inquirer," Beasley said, gesturing dramatically. "That's a mortal wound to the heart of someone who is so prized in his reputation."

Hangley, in a more low-key closing argument, stressed the right of a newspaper to question the actions of a public official.

"Do you believe that the newspaper should not be free to talk about questionable conduct by our elected officials?" he asked in a voice tinged with a New York accent. "Do you believe that a public official should be able to say, 'Unless you know for a fact that I was bought . . . you can't criticize me?' "

McDermott, he said, had "attempted to tell us that we've all got to be silent even when there's a truthful and important story to be told. . . . He has said in short that because he was elected to become a justice of the Pennsylvania Supreme Court, he is in fact above the law and he is in fact immune to criticism and those who criticize him must be punished."

During his four days on the witness stand, McDermott, always dressed in gray slacks, black blazer, white shirt and bow tie, asserted repeatedly that he had been maliciously defamed by two portions of the series: one questioning whether he violated canons of ethics in two particular cases, and one reporting that he had asked then-District Attorney Edward G. Rendell about a job for his son.

"When I read that newspaper, members of the jury, I was absolutely astounded," said McDermott, a tall, distinguished-looking man with gray, swept-back hair. "I couldn't truly believe what I was reading. I read that thing and I thought to myself, 'My God, they're accusing me of fixing cases,' and I was absolutely, totally astounded."

REPORTER DEFENDED SERIES

Biddle, during his nine days on the stand, defended the truth and fairness of the series and insisted he had accurately quoted people named in the articles.

"I tried to make these articles as fair, truthful and accurate as I possibly could," said Biddle, tall and lean with a full-faced beard. "I believe these articles - my stories - were fair and truthful and accurate."

Biddle, winner of the 1987 Pulitzer Prize for investigative reporting for another court series, said the series raised important questions about the conduct of the highest court officials in the state, an issue he said was of great importance to Pennsylvania's legal community.

He testified that he had spoken to judges, lawyers and court personnel about the state Supreme Court, and he noted that one judge, for example, had characterized the court as a "disgrace."

"The people who were in a position to know the most about this court . . . frequently had a lot of concern and doubt," Biddle told the jury. ''They felt the court gave an appearance of not always giving a fair shake."

Central to the trial was Biddle's account of two cases in which clients were represented by the Dilworth, Paxson, Kalish & Kauffman law firm, which had contributed $6,100 to McDermott's 1981 election campaign to the state Supreme Court, making it the largest single contributor.

In one case, subtitled "The Coal Case" in the series, the Dilworth firm represented the Pennsylvania Coal Mining Association, a lobbying group for coal companies, in a dispute between the industry and the state Department of Environmental Resources (DER).

INJUNCTION AT ISSUE

At issue was a Commonwealth Court injunction that the coal industry hoped would delay new environmental regulations. The DER appealed and wanted an expedited hearing before the Supreme Court.

The Supreme Court refused the DER's request, failing even to hold a hearing until March 1982 - months after the injunction had expired. In a 6-1 vote, with McDermott in the majority, the high court then ruled that the issue had become moot.

The series suggested that McDermott's participation in that case raised ethical questions because, the series said, he had received the $6,100 from the Dilworth firm and, with others, had gone on a daylong tour of the coal region in 1981 in a chauffeur-driven limousine provided by lawyer John M. Elliott, then a partner in the Dilworth firm and a friend of McDermott's.

McDermott, during his testimony, insisted that the trip to the coal country had been innocent and that he had not even been aware, at the time of his decision in the case, of the $6,100 in contributions.

He said that the reporting of those circumstances falsely implied that he was corrupt. "I read that to believe that they accused me of a crime," he testified.

In the other case, subtitled "The Filbert Partnership Case," Dilworth partners Harry Kalish and Elliott and two other lawyers from the firm had filed a petition for an appeal to the Supreme Court on behalf of a client partnership that had sued the city. Two lower courts had rejected the suit.

The largest shareholder of the 1301 Filbert Limited Partnership was Kalish's wife, Ada Kalish. Harry Kalish also had helped finance the partnership and had negotiated with city officials in its behalf, according to city records.

The state Supreme Court denied the partnership's request for an appeal in November 1982, but the series reported that McDermott had supported another justice, who had written an internal report urging his colleagues to grant a hearing.

McDermott, during his testimony, denied supporting that justice, Robert N. C. Nix Jr., in the call for a hearing, and Biddle, during his testimony, stood by his story.

Biddle, in testifying on why he believed McDermott should not have participated in either of the two cases, said:

"I knew from my research that the Code of Judicial Conduct in Pennsylvania says a judge should not participate . . . in any case in which his impartiality might reasonably be questioned. I felt strongly and still feel this way - that based on my research, that was a case in which Justice McDermott should not have participated."

The other part of the series challenged by McDermott involved Biddle's account of the circumstances surrounding the hiring of McDermott's son, James Jr., as a prosecutor in the District Attorney's Office.

Biddle reported that McDermott had called Rendell about a job for his son. The elder McDermott acknowledged the conversation, but insisted that he asked Rendell only to "hire my son if he was qualified and if there was an opening."

But McDermott emphatically denied ever telling Biddle, as was reported in the series, that "nepotism will never die."

"I didn't say, 'Nepotism will never die' when I spoke to Mr. Biddle about the hiring of my son," McDermott testified. "I told him, Daniel, that charges of nepotism will never die."

Biddle contended he had quoted McDermott accurately, and he was supported in that testimony by Sharon J. Wohlmuth, an Inquirer photographer, who took pictures of McDermott during the interview.

Overall, McDermott said, the series, through innuendo and "half-truths," unfairly depicted him as a corrupt judge who had acted improperly in two cases.

Asked whether an average reader was likely to doubt McDermott's ability to be impartial, McDermott replied, "Not only, Mr. Beasley, could they question my impartiality but they could believe that I . . . should be indicted for bribery, obstructing justice, abuse of office . . . and malfeasance."

But during cross-examination, McDermott acknowledged that he could not find a single word in the article that mentioned the word corruption.