Rawson v. Francis H. Leggett ( 1906 )

This action was brought for malicious prosecution. At the instigation of the defendants, as we shall assume upon this appeal, several indictments for grand larceny were found against the plaintiff in the county of New York, which were thereafter dismissed. Thereupon he brought this action and obtained a verdict for $25,000. It is insisted by the appellants that this result was erroneous and that plaintiff as matter of law failed to establish want of probable cause. A majority of the court concur in this view and think that the judgment should be reversed.

Appellants are and were wholesale grocers in the city of New York, having and carrying upon their books the accounts of many thousand customers. In 1901 and for some time prior thereto they had in their employ a salesman named Borchardt who made sales to and collections from a large number of customers. In November of said year it was discovered that during a period of about three years by manipulation of his customers' accounts and misappropriation of moneys collected from them he had stolen from his employers about $24,000, and criminal proceedings were instituted against him. It was the intention and custom of defendants to guard against such peculations as this upon the part of salesmen by sending every month to each of their customers a statement of account for comparison and verification, with the request to report any irregularities or discrepancies at the office, and not to the salesmen. In some manner these statements in the case of Borchardt's customers were wholly or largely suppressed and not sent, and thus the prompt discovery of his crime prevented.

During the period above mentioned and for a long time prior thereto plaintiff was in the employ of defendants as their head credit man, receiving a salary of $4,500 a year, and amongst other duties charged with those of looking after the accounts with customers and salesmen dealing with the latter. He assumed supervision over Borchardt's accounts and customers to the express exclusion of everybody except a member of the firm.

There has been no dispute in this litigation about the foregoing facts which, of course, were known to the defendants at the time they instituted the prosecution against plaintiff.

In addition, before instituting criminal proceedings, defendants knew, or personally or through their representatives were informed, of other real or alleged facts which, in connection with those already cited, are now claimed to have constituted a reliable and sufficient foundation for the assumption that plaintiff was guilty of the charges pressed against him. The existence of many of those facts and the correctness of the information relating thereto is not now challenged.

After his discovery and arrest, Borchardt made a confession both to Mr. Leggett and to others engaged in the investigation implicating plaintiff as a confederate in his crimes and as a partner to the extent of six or eight thousand dollars in the guilty proceeds thereof.

The monthly statements which should have been sent to Borchardt's customers were delivered by the bookkeeper to plaintiff, by whom, after being checked, they should have been delivered to addressing and mailing clerks.

Plaintiff and Borchardt were upon terms of great intimacy, which appeared to increase rather than decrease after the former concededly knew of the latter's crimes, and while plaintiff was still in the employ of the defendants. During the few months before Borchardt's apprehension, in the neighborhood of $1,600 were by him paid or passed to the credit of plaintiff.

In 1900 plaintiff consented that Borchardt should assume control of a certain account held by the defendants against one Yaeger, and although the moneys upon said account were collected by Borchardt in said year, no report or entry upon defendants' books was made to disclose these facts, and this account, amounting to several hundred dollars, made up part of the embezzlement. Subsequently, in proceedings threatened against Borchardt for perjury in claiming that he was the owner of defendants' account, plaintiff, when making an affidavit for his assistance, secured back from him or his attorney a slip of paper which he had written, indicating his willingness to hold back Borchardt's slips (made in the discharge of his duty as salesman relating to his accounts) for a short period, because of his lack of funds.

In the midst of the investigation of Borchardt's crimes, plaintiff, without having, so far as appears, any other lucrative engagement, resigned his position and salary of $4,500 with defendants, and shortly thereafter left their employ.

The district attorney was made acquainted with the foregoing facts and information. Defendants occupied a considerable length of time in investigating the subject, and with the exception of one set of facts hereafter specially to be referred to, as to which the parties are in conflict, we think fairly and fully placed before the district attorney the knowledge and information possessed or acquired by them. In addition, the latter official, through one of his assistants, caused an extended examination to be made of many of the people who had knowledge of the facts or had supplied the information, and after this had been done he advised the submission of charges against Rawson to the grand jury with the resulting indictments heretofore mentioned.

Defendants expressly deny any malice towards plaintiff and assert their reliance upon the advice of counsel and especially of the district attorney in instituting the criminal prosecution which they undertook.

We think that upon all of the foregoing facts and others appearing in the record, to which we have not made specific reference, it must be held as a matter of law that defendants had probable cause to believe that Rawson was guilty of aiding Borchardt in the larcenies which were concededly committed, and were not guilty of any malicious prosecution.

Plaintiff especially challenges such conclusion and the propriety and legality of defendants' conduct in three respects, and insists that such case was made out for the consideration of the jury that the judgment should stand.

In the first place he urges that it was a question of fact whether Borchardt ever made any confession implicating him and that even if he did it was still for the jury to say whether such confession was entitled to any credence as a basis for what was subsequently done. We cannot agree with this contention in either of its branches. The proof that the confession was made does not rest upon the evidence alone of Mr. Leggett, but is sustained by other evidence so ample and trustworthy that the jury would have had no right to disregard it. So, too, while this confession might be the subject of suspicion as dictated by Borchardt's personal interests, and would be insufficient of itself to furnish a basis for the prosecution of plaintiff, we think that it was so supported and corroborated by other facts appearing to exist at the time the indictments were found that defendants were entitled to rely upon it as furnishing in part a probable cause for complaint. (Molloy v. L.I.R.R. Co., 59 Hun, 424; Blunk v. A., T. S.F. Ry. Co., 38 Fed. Rep. 311.)

In the second place, it is urged that taking into account plaintiff's long service with them and prior good character, defendants should have communicated with him before making any complaint and that if they had done so they would have learned that various transactions, upon the appearance of which they acted, were innocent as now claimed by plaintiff. For instance, he not only denies his guilt generally but he testifies that the moneys paid to him by Borchardt during the few months preceding the former's apprehension were loans and not proceeds of larceny; that the transaction of the Yaeger account was an innocent one undertaken for the purpose of collecting a debt due to the defendants; that his intimacy with Borchardt and his frequent visits to him after the discovery of his wrongdoing were in connection with the moneys loaned as above stated.

We are not prepared to assent to the proposition that a person having cause to believe that another has committed a crime must under all circumstances go to the latter, acquaint him with his suspicion and ask for his explanation of apparently unfavorable circumstances, or accept the risk of being found guilty of malicious prosecution if he does not do so. There undoubtedly may be many cases where reasonable prudence would suggest such a course, and where the failure so to do might furnish, in part at least, the basis for holding the prosecutor guilty of unreasonable conduct. We do not think, however, that this is one of those cases. The defendants made their investigation with much patience and care, and it was not incumbent upon them under all of the circumstances to warn plaintiff of their suspicions and afford him the opportunity, if he so desired, to escape from the reach of any just prosecution. (Kutner v. Fargo, 34 App. Div. 317, 322.)

Lastly, the plaintiff urges certain facts, reference to which has been purposely reserved until this point, which must be assumed to have been within defendants' knowledge at the time plaintiff was indicted, and which it is claimed so strongly tended to establish the latter's innocence of the charges preferred against him as to raise an issue of lack of probable cause for the consideration of the jury.

Plaintiff testified that during the same period when Borchardt was making his conceded embezzlements from defendants, upon about ten occasions customers of Borchardt's who had received statements for verification and correction came to defendants' office and reported that the statements were not correct and their accounts not as carried upon defendants' books under Borchardt's directions, and that all of those facts were reported by plaintiff to defendants, who took up the investigation of said matters. And it is urged that it was so highly improbable that Rawson, if engaged in suppressing statements to some customers and helping Borchardt to embezzle from their accounts, would have reported occurrences of a precisely similar nature, that it was unreasonable to believe him guilty of the crimes with which he was charged; at least, that it was for the jury to say whether a person acting with reasonable care and prudence would have so suspected and charged him in the light of the facts mentioned.

We do not think, however, that such facts should be allowed to so far outweigh the other evidence in this case in favor of the propriety of defendants' conduct as to create an issue for the jury. This evidence of Rawson's is emphatically denied by Mr. Leggett, and seems improbable. But, assuming its truth, it constitutes but a single feature of the case as presented, and is to be considered in the light of and in connection with all of the other testimony presented to us. The dominant features of the case remain undisputed, the embezzlement of Borchardt; that in the proceeds of that embezzlement the plaintiff shared, though he asserts innocently and ignorantly merely by loans from Borchardt, the intimacy between Borchardt and the plaintiff, the transaction in relation to the Yaeger account and the minor facts already recited.

When we take this survey of the complete record we are impressed, as stated at the beginning, that plaintiff has failed to meet the burden which rested upon him of establishing any malice upon the part of defendants or want of probable cause for the prosecution which was instituted against him.

The general principles which govern us and lead us to this conclusion are familiar and well settled.

The question is not whether plaintiff's evidence now given that he did not commit the crimes charged to him is true. The propriety of defendants' conduct in causing him to be indicted is to be decided by the facts as they appeared to be at the time the prosecution was instituted, and the question is whether these facts as they then appeared were such that a discreet and prudent person would have been led to the belief that the accused had committed the crime with which he was charged. If defendants had knowledge of facts actual or apparent strong enough to justify a reasonable man in the belief that they had lawful grounds for prosecuting the plaintiff in the manner complained of, then probable cause was present and this action will not lie. As was stated by Judge VANN in Burt v. Smith (181 N.Y. 1, 5): "The want of probable cause does not mean the want of any cause, but the want of any reasonable cause, such as would persuade a man of ordinary care and prudence to believe in the truth of the charge. Probable cause does not necessarily depend upon the actual guilt of the person prosecuted, but may rest upon the prosecutor's belief in his guilt when based on reasonable grounds. One may act upon what appears to be true, even if it turns out to be false, provided he believes it to be true and the appearances are sufficient to justify the belief as reasonable. * * * If probable cause exists, it is an absolute protection against an action for malicious prosecution, even when express malice is proved."

Public policy requires that all persons should feel secure in the right to resort to courts for the apprehension and punishment of crimes, and this policy must be preserved and encouraged even though it result in occasional hardship to the individual, provided only that the prosecution has been free from malice and has been warranted by such facts, actual and apparent, as would lead a person of reasonable care and prudence to undertake it.

It is also well settled that where the facts are undisputed, the question of the existence of probable cause is one of law for the court rather than of fact for the jury. (Thaule v.Krekeler, 81 N.Y. 428; Burt v. Smith, supra.)

The undisputed facts in this case clearly establish to our mind that the defendants were without malice, and that after an investigation which was cautious and painstaking in the extreme, they possessed knowledge of actual facts and acquired reliable information of apparent facts which fully justified them in proceeding as they did. In addition, they received and must be assumed to have relied upon the advice of learned counsel, including the district attorney.

The judgment below should be reversed and a new trial granted, costs to abide event.