Graham v. Life Ass'n

37 S.W. 995, 98 Tenn. 48

• Court: Tennessee Supreme Court
• Decided: March 17, 1896
• Status: Published

Opinion

McAlister, J.

The plaintiff commenced this suit in the Circuit Court of Davidson County against the Fidelity Mutual Life Association and James M. Head, to recover damages for an alleged malicious prosecution. There was a verdict and judgment in favor of the defendants. Plaintiff appealed and has assigned errors. The record discloses that from May 8, 1893, to September 12, 1893, the firm of Selden & Graham, composed of A. A. Selden and the plaintiff, James Graham, was the general agent in the State of Tennessee for the defendant insurance company, with authority to solicit life insurance, deliver policies, collect premiums, and remit the same to the association at Philadelphia. About October-10, 1893, the defendant company caused the arrest, indictment, and prosecution of said agents on a charge-of embezzlement. The defendants were both acquitted of said charge, and thereupon plaintiff, Graham, instituted this suit against the company and James M„ Head, its attorney, to recover damages for the criminal prosecution.

The fundamental inquiry underlying the present action is, whether at the time the prosecution was set on foot there were such facts and circumstances of an incriminating character presented to the company as' wonlcl have generated in the mind of a reasonable man the belief that the crime of embezzlement had been committed. In all such cases the real inquiry is, not whether, in point of fact, the crime has been committed, but whether there existed reasonable grounds to believe the charge was true, and was the belief honestly entertained. It is a case, then, of apparent guilt as contradistin-guished from real guilt, and an honest belief of it at the time upon the part of the party prosecuting, and upon sufficient grounds to warrant that belief. In all such cases it is well settled that the want of probable cause must be expressly and substantially proved and cannot be implied. There must also be a concurrence of malice with want of probable cause. From the want of probable cause malice may be inferred by the jury, but from the most express malice there can be no inference or deduction drawn of want of probable cause. The malice necessary to support, this form of action is not spite or malevolence towards the plaintiff, but it means the evil mind that is regardless of social duty and the rights of others. These principles are axiomatic, and need, no citation, of authorities.

It appears from the record that the Fidelity Mutual Life Association, of Philadelphia, had been represented in Tennessee by the said A. A. Selden prior to the formation of his partnership with the plaintiff, Graham. At the date of the appointment of the firm of Selden & Graham as general agents of said company for the State of Tennessee, the said Selden was delinquent in his accounts with the company for a considerable amount, and had represented to the company that his new partner, the plaintiff, Graham, was to pay for the latter’s interest in the firm the sum of $500 in cash, and execute three notes for the sum of $500 each, and Selden promised out of this money to settle his indebtedness to the company. It turned out that 'Graham, under his private contract with Selden, was to pay $500 in cash, and $1,500 out of the prospective profits of the business. Selden having failed to settle with the company, finally went to the home office, at Philadelphia, in July, 1893, and, after a thorough- examination of his accounts, admitted an indebtedness to the association amounting to $1,738, and proposed to pay it by sight draft on Selden & Graham, of Nashville, for $388.28,- and a remittance of $1,350 the following week. The draft by him for $388.28 was protested for nonpayment, and the only remittance made was the sum of $75, which was not sent until September. We cannot doubt, from the facts disclosed in the record, that Graham had knowledge of Sel-den’s indebtedness to the company.

It further appears that, on September 8, 1893, the general agent of the company, one Bolling, came to Nashville for the purpose of obtaining a settlement of Selden’s individual indebtedness to the company. While here, he discovered a deficiency also in the accounts of the new agency of Selden & Graham. Bolling thereupon demanded a settlement of the firm’s business. Graham admitted that he had in his possession money belonging to the association, but refused to turn it over, claiming in an indefinite way, and without specifying them, that he had counter claims against the association. Bolling having failed to get a settlement, either of Selden’s individual shortage or of the firm’s indebtedness, revoked the authority given Selden & Graham as general agents of the company, and took possession of the office. Bolling thereupon laid the matter before Messrs. Champion, Head & Brown, general counsel for the company, and asked their advice. Counsel advised that, under the facts stated, the funds collected were trust funds, and that Selden & Graham were amenable, to an indictment for embezzlement, and that a civil action would also lie for the recovery of the money. Counsel were instructed to do whatever might be necessary, and, thereupon, Bolling left the State.

Thereafter, on October 6, a bill was filed in the Chancery Court for the collection of said deficiency, and, on October 10, an .indictment was returned by the grand jury of Davidson County against Selden & Graham, charging them with embezzlement. As already stated, the plaintiff was acquitted of the criminal charge, and brings this suit to recover damages for the wrongful prosecution. In this brief statement we have not undertaken to narrate all the facts or to point out all the controverted issues. - The verdict of the jury has settled all the disputed questions of fact, and by every intendment they have been resolved in favor of the defendant. This mere outline of the controversy is made for a better understanding of the assignments of error, which will now be noticed.

The first assignment of error is that the Court erred in permitting the witness, George C. Mitchell, over objection of plaintiff’s counsel, to read to the jury a statement purporting to be the account between the plaintiff and the defendant company, when said statement was taken from the original books and cards by others than the witness himself. Counsel for plaintiff states, in this assignment of error, that notice had been served on defendant to produce the original books and cards. We find, upon an examination of this notice, that while it does embrace letters, reports, and accounts, there is no demand for the production of the original books and cards. But, conceding for the purposes of this assignment, that no notice was necessary, we are yet of opinion that this assignment is based upon an erroneous predicate in respect of what transpired in the trial Court. It assumes that the Circuit Judge permitted to be read to the jury, as original evidence, disconnected with the personal knowledge of the witness, a statement of what is shown by certain books and cards without the production of the originals. This is alleged to be erroneous for three reasons — first, because the original cards referred to by the witness are the best evidence, and were demanded of the defendant; second, because the said witness failed to identify the said paper he read to the jury as a copy of the cards and books from which it purports to have been taken; third, because a portion of the items in said statement were taken from the cards and books by others than the witness himself.

An examination of the record will show that the Court did not allow this statement to be read to the jury as original evidence, but simply permitted the witness to refer to it as a memorandum, to refresh his recollection. Moreover, the record shows that the witness, Mitchell, was the chief clerk of the defendant company, and the original entries were made either by the witness himself or by his assistant bookkeepers under his personal supervision, and were based upon reports and accounts furnished by the firm of Graham & Selden, and the preceding firm, of which Mr. Selden was a member. In addition to this, the witness testified in respect of his knowledge of the correctness of these accounts. So that in no sense is this a case in which copies of books and accounts have been admitted as original evidence, as assumed in the assignment of error. Greenleaf on Evidence, Yol. I., Sec. 436, p. 597.

The second assignment of error is based upon the refusal of the Court to permit the plaintiff to introduce in evidence the individual contract between A. A. Selden and the defendant association, made some time prior to the formation of the firm of Selden , & Graham, and claimed to be in force up to the time of the execution of the Selden & Graham contract with the association. Plaintiff had shown, continues the assignment, that he had purchased a one-half interest in all contracts which Selden had with the association, and that the same was made with the knowledge and approval of the association. Defendant objected to this evidence because it was an offer to prove a contract between Selden and the insurance company prior to the existence of the contract between Selden & Graham and the company. It is insisted this ruling was erroneous, for the reason that plaintiff, Graham, had not only shown that he had purchased a one-half interest in all of Selden’s interests, but, that prior to the time Bolling, the superintendent, came to Nashville and the dissolution of the Selden & Graham agency, be had fully communicated to the association the nature of the purchase he had made from Selden, and had demanded from the association an accounting for that which he had purchased.

The individual contract between Selden and the defendant company, was entered into prior to the formation of the firm of Selden & Graham, and was supplanted by the new contract entered into between Selden & Graham and the defendant association. It was shown in proof that Selden, during the pendency of his individual contract with the company as general agent, and also while subagent, had become indebted to the company in the sum of $1,738, for money misappropriated by him. This indebtedness was due and unsettled at the date of the formation of the firm of Selden & Graham, who became general agents for the company in the State of Tennessee. About the time this firm entered into its contract with the company, the members made a private contract with each other, by the terms of which, Graham, for a one-half interest in said firm, paid to said Selden the sum of $500 in cash, and stipulated to pay the further sum of $1,500 out of the profits of the business.

The contention of Graham is, that, under his private contract with Selden, he acquired a .one-half interest in the renewal commissions of Selden’s individual contract with the company, and that it was error for the Circuit Judge to exclude from the consideration of the jury the individual contract of Selden with the company, which would show the extent of Graham’s interest in said contract. It should be remarked in this connection, that when Bolling came to Nashville for a settlement of Sel-den’s shortage, and accidentally discovered a deficiency in the accounts of Selden & Graham, the latter admitted that he had in his hands funds belonging to the company, but undertook to set up a counterclaim against the company.

On the trial, Graham undertook to establish his counterclaims in two ways: (1) By proof of traveling expenses and other items incident to running the business, which the contract of Selden & Graham with the association expressly provided should be borne by the agency; (2) plaintiff offered to prove by Selden the estimated value of his renewal interests in policies underwritten by them as general agents. The Circuit Judge sustained the exception of defendants’ counsel, and excluded this evidence.

In this we think there was no error. These renewal interests were wholly speculative, and contingent upon the duration of the policies for eight years and the continuation of plaintiff’s agency. The Circuit Judge, however, held that “ plaintiff would be entitled to show, at the time a demand for settlement was made upon him and refused, that Mr. Selden had in the hands of the company money actually to his credit on account of renewal commissions, and that there was nothing due from Mr. Selden to the company, or, at least, there was a balance due him after paying off his shortage to the company, but that the simple, estimated value of renewal interests, calculated upon the principle of insurance average — namely, the value to the agent of possible, contingent, or uncertain renewals — cannot be brought up as an offset in this cause.” This ruling was not only proper, but the proof shows that there was nothing due Selden on the tenth of September, 1893, when the company demanded a settlement. On the contrary, the testimony conclusively shows that Selden was indebted to the company in the sum of $1,738, and the firm of Selden & Graham had not accounted for funds amounting to $683. The contract between Selden & Graham and the association expressly provides that the value of renewal commissions is fixed according to the length of time the policies have been in force, and no value is fixed upon a renewal interest in any policy until it has been in force at least one year, and the renewal premium actually paid, and the proof in this cause seems to indicate that no renewal commissions could have been due Selden until November 8, 1893, which was several months after the agency of Selden & Graham had terminated. There is proof in the record tending to show that the renewal commissions upon the policies alive September 18, 1893, date of dissolution of the agency, would scarcely liquidate the interest upon the aggregate amount of indebtedness due from these several agencies. It having been shown that Selden had no interest in said several agencies, there was no error in disallowing the introduction of the Selden contract, nor was there error in the action of the trial Judge excluding the testimony of Selden to the effect that after the delivery of a policy the agent had actually earned his renewal commissions, for the reason that such a statement contravened the express stipulations of the contract with Selden & Graham, already quoted, which provide that the renewal commission is not earned until the policy shall have been in force one year, and the second year’s premium shall have been paid. This disposes, substantially, of all material assignments of error in respect of the rulings of the Court upon questions of evidence. •

The first assignment upon the charge is that the Judge erred in the following instruction: “This action is only intended to apply to cases where a criminal accusation is made against an innocent man with malice, and in the absence of even a fair, reasonable probability that it is true.” The contention of plaintiff is that the Court should have charged that it was only ‘ ‘ such facts and circumstances brought to the mind of -a 'reasonably prudent and cautious man as would cause him to believe in the guilt of the accused,” that would operate as a justification for a wrongful prosecution, and not a “ fair, reasonable probability of its truth.” It is not perceived wherein the charge given was less favorable to plaintiff than the' instruction counsel claim ought to have been given. The charge, as given, was correct, and if counsel desired any explanation or a charge upon a different aspect of the facts, it should have been formulated and presented to the Court.

The next assignment necessary to be noticed is that the Court charged that “malice may be inferred from the want of probable cause, but this is not a presumption of law nor a necessary presumption. It is a mere inference of fact, which you may or may not make, as the circumstances require.”

The criticism of appellant is more especially directed to the following paragraph from the charge, which was given by the Circuit Judge in connection with his explanation of the term malice, to wit: “If this prosecution was instituted for the purpose of forcing the payment of a debt, and not for the purpose of bringing an offender to justice, you would be justified in finding that it was malicious.” Plaintiff claims that this instruction was erroneous, for the reason that it left the inference of malice to the jury, whereas, if it appears that the prosecution was for the purpose of coercing the payment of a debt, malice will be inferred as a presumption of law. Counsel cite, in support of this contention, the case of Morgan v. Duffy, 10 Pickle, in which it was said, viz.: £ ‘Actual malice, in the sense of ill will or personal hatred, need not be shown. Any .improper motive is sufficient to constitute legal malice, and malice will be inferred when the object of the prosecution is to enforce the payment of a debt. ’ ’ While this instruction was not strictly accurate, we think the jury must have understood • from the charge of the Court, that a suit instituted for no other purpose than the collection of a debt was a malicious suit, and the objection to the charge is therefore hypercritical, and the error not reversible.

The next assignment of error is based upon the refusal of the trial Judge to give the following instruction to the jury, submitted by plaintiff’s counsel, to wit: “That if defendants believed that the plaintiff was guilty at the time the prosecution was instituted, but that afterwards, and before the trial, they believed, or subsequent to the finding of the indictment facts were brought to their knowledge which would cause a reasonable and prudent man to believe, that the plaintiff was not guilty, and that they then continued to prosecute him, the prosecution so continued is without probable cause, and from such want of probable cause the jury would be warranted in inferring malice.” We find no evidence in the record that warranted such a charge, and, hence, the request was a mere abstraction, which was properly refused.

The fourteenth request submitted by counsel for plaintiff was, viz.: “That if the jury find that the defendant association sought the advice of Mr. Head for the purpose of ascertaining whether or not it was possible to scare or bluff the plaintiff out of any amount of money, that advice of counsel, so sought, is not sought in good faith, and is not available as a defense.” We think the instructions of the Court, in his general charge on the subject of advice of counsel, fully and accurately covered the law on the subject. He said, viz.: “If you should find that before beginning any criminal prosecution, defendant’s agent, S. C. Bolling, consulted, in good faith, James M. Head, in his capacity as an attorney and counselor, giving to said Head a. full, true, and complete statement . of all material facts within his knowledge, and you also find there were no other material facts relative to the matter which the defendant might have ascertained by the-exercise of reasonable diligence, and if you further find that after considering all the facts, so submitted, Mr. Head advised defendant’s agent that the offense of embezzlement had been committed by plaintiff, James Graham, and if you further find that this advice of counsel was warranted by the law governing and defining embezzlement (as hereafter to be given in charge), and if you further find that this advice was accepted and acted on in good faith, and under an honest belief of the plaintiff’s guilt, such advice, thus sought and acted upon, would be sufficient evidence of probable cause, so far as the insurance company is concerned, and in the case just supposed you should find in its favor.

“Again, if Mr. Head, after his employment as attorney, did, as the authorized representative of the company in that matter, submit to the Attorney - general for the county of Davidson, in good faith, a full, true, and complete statement of all material facts within the knowledge of the company’s agent and himself, and if you find there were no other material facts relating to the matter which he or the defendant company might have ascertained by the exercise of reasonable diligence, and if you further find that, after considering all the facts so submitted, the Attorney-general advised the indictment of plaintiff upon the charge of embezzlement, and that this advice was warranted by the law governing and defining embezzlement (hereafter to be given in charge), if you find that the advice was-accepted and acted upon by both defendants, in good faith and under an honest belief of plaintiff’s guilt, this would be sufficient evidence of probable cause, and, in the case just supposed, you should find for both defendants. ’ ’

We find no reversible error in the record, and the judgment is therefore affirmed.