Biggans v. Hajoca Corp.

• Decision Date: 19 January 1950
• Docket Number: Civ. No. 8676,8675.
• Citation: 94 F. Supp. 593
• Parties: BIGGANS v. HAJOCA CORP. DASH v. HAJOCA CORP.
• Court: U.S. District Court — Eastern District of Pennsylvania

94 F. Supp. 593

BIGGANS v. HAJOCA CORP.

DASH v. HAJOCA CORP.

Civ. Nos. 8676, 8675.

United States District Court E. D. Pennsylvania.

January 19, 1950.

COPYRIGHT MATERIAL OMITTED

Thomas D. McBride, Philadelphia, Pa., for plaintiffs.

Harry R. Axelroth, of Axelroth & Porteous, Philadelphia, Pa., for defendant.

GANEY, District Judge.

The plaintiffs, Abe Dash and Paul Biggans, brought separate actions¹ to recover damages suffered by them as the result of criminal proceedings instituted and prosecuted against them by the defendant. In the criminal proceedings, terminated by acquittal, the plaintiffs were separately charged with larceny, receiving stolen goods, and conspiracy. Since the basic facts and legal questions involved in each are the same, the actions were consolidated for trial. After hearing testimony for eight days, the jury returned a verdict for each plaintiff in the sum of $15,000. Defendant has filed motions, now before us, to set aside the verdicts and enter judgments in its favor, or in the alternative for new trials.

For some time prior to October 1947, certain of defendant's officers and employees had noticed a severe loss in inventory of plumbing and heating supplies supposed to be on hand at defendant's warehouse at North Ninth Street in Philadelphia, Pennsylvania. At defendant's request, a surveillance was maintained by two of defendant's employees and agents of a national detective agency. In the course of this surveillance, it was discovered that several of the order pickers were delivering various supplies to the plaintiffs, who purchased on credit, without at the same time making the required registry or sales record to show that the goods in question were intended to be charged to or paid for by them. Plaintiffs, who were plumbing contractors, had been doing business regularly with the defendant for several years immediately prior to November 28, 1947; they had accounts and unlimited credit with that concern.

In October or the early part of November 1947, the vice-president of defendant communicated with defendant's general counsel who suggested retaining an attorney familiar with criminal law and experienced in trial work. On November 10, 1947, upon the retained attorney's advice, the defendant caused the arrest of two employees responsible for permitting material to be placed in plaintiffs' trucks. Upon being arrested, one of the employees admitted in a signed statement that he had transferred supplies over a period of months to the plaintiffs and that he had received gratuities from them for such services. The other employee signed a statement implicating the first. After he had read these statements and the written reports of the two employees and the agents of the private detective agency, and had received the advice of retained counsel, the vice-president of defendant, without questioning the plaintiffs beforehand, caused plaintiffs to be arrested on November 28, 1947, and subsequently prosecuted in the Quarter Sessions Court of Philadelphia County.

It was admitted by defendant's vice-president in plaintiffs' side of the case that there was in existence during the time the alleged losses of materials occurred a "crime policy" insuring the defendant, among other things, against losses for dishonesty of its employees and inside robbery, and that on or about November 7, 1947, prior to the time plaintiffs were arrested, defendant had filed with the insurance company a large claim for such losses.² The record is replete with loose business methods in effect at the defendant's plant, which permitted customers, among other things, to write up their own registers and wander throughout the warehouse without being in anywise closely watched, even though at the period in question, plumbing supplies were extremely difficult to procure.

In support of its motions for judgments, defendant contends that this court should have ruled as a matter of law, instead of leaving it to the jury to determine, that there was probable cause for bringing and maintaining the criminal proceedings. In the leading case of Curley v. Automobile Finance Co., 1941, 343 Pa. 280, 290, 23 A.2d 48, 53, 139 A.L.R. 1082, the Supreme Court of Pennsylvania said: "In the trial of cases the `general rule' is that the jury is the trier of questions of fact. In cases of malicious prosecution this rule (unless the circumstances hereinafter noted are present), does not prevail, for in such cases the trial judge and not the jury determines whether or not the prosecutor in the criminal case * * * had an honest and reasonable belief in the existence of a probable cause for the prosecution's initiation. However, where there is evidence from which the jury in the action for malicious prosecution may legitimately infer that the prosecutor's hope of private gain had a part in the initiation of the criminal proceedings which gave rise to the action, the `general rule' prevails and the jury decides the pivotal question of fact". Also see Angeloni v. Lederer et al., 1926, 89 Pa. Super. 383. Thus the question presented is whether there is any evidence in the case from which the jury may legitimately infer that the defendant's hope of gain had a part in the initiation of the criminal proceedings. It is admitted that a crime policy was in existence during the time of the alleged losses and that defendant had filed a substantial claim thereunder prior to the arrest of the plaintiffs. From the evidence presented at the trial, it would seem that the defendant could recover only under paragraphs A and E, concerning coverage of the policy³. Under paragraph A, the insurance company's limit of liability was $100,000, while under paragraph E, an amount greater than $5,500 could not be recovered by the defendant. Thus if the defendant were to recover an amount in excess of $5,500, it would be, as defendant's vice-president believed, by virtue of paragraph A. It probably would not be necessary for defendant to show, in order to recover under paragraph A, that the inventory loss was the result of a dishonest act of one of its employees in collusion with the plaintiffs. Nevertheless, under the conspiracy counts of the indictments in the criminal proceedings, each plaintiff was made a co-defendant with one of the present defendant's employees. If the defendant could have shown that there was collusion, its claim against the insurance company would not be weakened thereby. Further one of the plaintiffs testified that he was told by the vice-president of defendant that since there had been previous losses at defendant's warehouses in Philadelphia and Chester, Pennsylvania, and no criminal proceedings had been brought against the suspected persons, the insurance company had requested defendant to prosecute those suspected of causing the present losses so as to make an example of them. On a motion to set aside the verdict and to enter judgment in defendant's favor, we must assume not only that such a statement was made but also its truth, and that all reasonable inferences to be drawn from the evidence must be viewed in the light most favorable to plaintiffs. Van Sant v. American Express Co., 3 Cir., 1946, 169 F.2d 355, 365. Therefore we must assume the jury found that the defendant did not honestly and reasonably believe that the plaintiffs committed the crimes for which they were prosecuted. As basis for this finding is the fact that the defendant prosecuted the plaintiffs in order to satisfy and comply with the wishes of the company to which it looked to recoup its losses and this for the sole purpose or object of recovering its losses under paragraph A of the policy. In reaching this conclusion, it seems to us, we are applying the rule announced in the Curley case, supra, to a factual situation a step removed from those to which Pennsylvania Courts have applied it. We feel, however, that the latter courts would do likewise under similar circumstances. See Van Sant v. American Express Co., supra, 169 F.2d at pages 368-370.

To avoid the application of the rule in the Curley case, defendant maintains that the admitting of the "Crime policy" into evidence was error because the policy does not cover any losses sustained by defendant as the result of any conduct or acts of the plaintiffs, and therefore, the argument runs, it could not derive any pecuniary gain by instituting criminal proceedings against either plaintiff. A legal interpretation of the crime policy or the determination of what conditions must exist before the defendant may recover thereunder are not necessary in this case. Since the defendant believed, as indicated by its filing of the claim, that it could recover under one or more of its terms, the document was offered into evidence by plaintiffs for the purpose of showing what its actual terms were. This was done so that the jury would not draw any unfair inferences from the mere statement, which was obviously admissible, that such a policy existed. We can agree that a submission of the entire policy, without some explanation, to a jury might confuse them. But under the motions for judgments, we cannot make such an assumption with respect to the present jury. Moreover the attempt by plaintiffs' counsel to point out what he thought were the pertinent and relevant paragraphs of the policy to the jury was cut short by the objection of defendant's counsel on the ground that the document spoke for itself.

With respect to another essential element of an action for malicious prosecution the defendant claims that each plaintiff has failed to sustain his burden of proving malice. The rule is well established that the existence of malice is a question for the jury to decide; and that malice may be inferred from want of probable cause. Schofield v. Ferrers, 1864, 47 Pa. 194; Curley v. Automobile Finance Co., supra. Where the plaintiffs' evidence, as in the instant case, justifies a finding by the jury that private gain had a part in the...