Appeal
from Superior Court, Forsyth County; Devin, Judge.
Action
by Carpenter, Baggott & Co., against W. M. Hanes, with
counterclaim by defendant. Judgment overruling demurrer to a
counterclaim, and refusing plaintiffs leave to take a
nonsuit, and plaintiffs appeal. Reversed.
In an
action by a broker to recover balances due on trades in
cotton futures, a counterclaim based on an action and
attachment on the same cause of action against defendant in
another state wrongfully and maliciously sued out held not an
action for an abuse of process, but for malicious
prosecution.
In an
action brought in New York to recover the balance due on
trades in cotton futures, with a writ of attachment therein
though defendant had no effects in New York, where there was
no arrest of his person or interference with his property
held, that there was no abuse of process after it was duly
issued.
The
plaintiffs complained as follows:
(1)
Plaintiffs above named, under the firm name of Carpenter
Baggott & Co., were, at the times hereinafter mentioned,
engaged (in the ordinary course of their business) in
buying and selling cotton for a commission. (2) Defendant,
W. M. Hanes, is a citizen and resident of the state and
county aforesaid, and was, at the times hereinafter
mentioned, engaged (in the ordinary course of his business)
in the manufacture of cotton. (3) On and between the 12th
day of June, 1912, and the 27th day of September, 1912,
plaintiffs purchased and sold for defendant, and at his
special instance and request, 5,000 bales of cotton. (4)
Plaintiffs, at the special instance and request of
defendant, paid out for defendant, in and about the
purchase and sale of said 5,000 bales of cotton, the sum of
$11,300. (5) Defendant agreed to pay plaintiffs the sum of
$15 per 100 bales as plaintiff's commission for buying
and selling said cotton, or the sum of $750, for
plaintiff's services in buying and selling said 5,000
bales of cotton. (6) Defendant has paid plaintiffs on said
aggregate indebtedness of $12,050, the sum of $9,305, but
has failed and refused to pay the balance due plaintiffs,
to wit, $2,745. Wherefore plaintiffs demand judgment, that
they recover of defendant, W. M. Hanes, the sum of $2,745,
with legal interest from the 27th day of September, 1912,
and the costs of this action.
Defendant
answered, denying generally the allegations of the complaint,
and setting up three counterclaims. In the first he averred
that he had requested plaintiffs, cotton merchants of New
York City, to sell for his account for future delivery,
according to the rules of the New York Cotton Exchange, a lot
of cotton, and that he deposited a large sum of money to
cover margins; that they were not, and were not intended to
be, real sales, but the transactions were to be settled
upon a basis of the rise or fall of prices. It all amounts to
this, that they were dealing in cotton futures--gambling
transactions, pure and simple. He prayed judgment for $3,000,
amount of money deposited with plaintiffs as margins. In a
second counterclaim he alleges that plaintiffs unlawfully and
in violation of the contract closed out certain purchases
made by them for the defendant, for which he claims $3,000 as
damages. As a third counterclaim, he alleges that plaintiffs
had unlawfully and wrongfully brought suit in New York for
the same cause of action, as they allege herein, and
wrongfully and maliciously sued out a writ of attachment--
"for
the purpose of injuring, harassing, and embarrassing
defendant, and not for the purpose stated in the writ, but to
force defendant to pay a debt to them which he did not owe,
and which was not collectible in law or in equity."
He
alleges further in the counterclaim:
"That
defendant had no property or effects in New York at the
time the warrant of attachment was issued, and at the time
of its alleged service, which was subject to levy or
attachment for the said cause of action of the plaintiffs,
and this was well known to them."
He then
alleges that the court of New York had no jurisdiction of
plaintiffs' action, and there was no service of the
process in the same. He asked that plaintiffs be restrained
and enjoined in this action from prosecuting the New York
suit, in order to prevent circuity and multiplicity of
actions, and useless expense.
Plaintiffs
demurred to the several counterclaims, and, upon the ground
that they were invalid and did not state any cause of action
against them, or any which could be prosecuted in this
action, they asked to be allowed to take a nonsuit. The court
sustained the demurrer as to the first and second of the
counterclaims, from which defendant did not appeal, and
overruled it as to the third counterclaim, and refused the
plaintiffs leave to take a nonsuit, and to each of these
rulings the plaintiffs excepted and appealed.
Joseph
E. Johnson, of Warsaw, and Manly, Hendren & Womble, of
Winston-Salem, for appellants.
Louis
M. Swink, of Winston-Salem, for appellee.
WALKER,
J. (after stating the facts as above).
We need
consider but the single question whether the third
counterclaim is a good one in law, assuming the truth of the
facts alleged, and not any conclusion of law from them which
is therein stated; for, if the facts as alleged do not
constitute a valid counterclaim, the demurrer should have
been sustained, and this would clear the way for
plaintiff's voluntary retirement from the court by way of
a nonsuit, which it was his right to do, there being nothing
left in the answer requiring his further presence, except the
prosecution of his own cause, which he had a right to abandon
by entering a non sequitur, as no other affirmative relief
was prayed against him.
The
action is really not one for an abuse of process, but for a
malicious prosecution of the New York action and the wrongful
suing out of the attachment. An abuse of process is some
unlawful use of the process for the accomplishment of some
end foreign to the purpose for which it may be issued. This
subject has been fully and exhaustively considered by this
court in several cases. Railroad v. Hardware Co.,
138 N.C. 174, 50 S.E. 571, 3 Ann. Cas. 720; Jackson v.
Telegraph Co., 139 N.C. 356, 51 S.E. 1015, 70 L. R. A.
738; Railroad Co. v. Hardware Co., 143 N.C. 54, 55
S.E. 422; Ludwick v. Penny, 158 N.C. 104, 73 S.E.
228; Wright v. Harris, 160 N.C. 542, 76 S.E. 489. In
Railroad v. Hardware Co., 143 N.C. 58, 55 S.E. 424,
the Chief Justice said:
"It
may be as well to note here the distinction between an
action for malicious prosecution and an action for abuse of
process. In an action for malicious prosecution there must
be shown: (1) Malice; and (2) want of probable cause; and
(3) that the former proceeding has terminated. Railroad
v. Hardware Co., 138 N.C. 174 [50 S.E. 571, 3 Ann.
Cas. 720]. In an action for abuse of process it is not
necessary to show either of these three things. By an
inadvertence it was said in the case last cited that want
of probable cause must be shown. 'If process, either
civil or criminal, is willfully made use of for a purpose
not justified by the law, this is an abuse for which an
action will lie.' 1 Cooley, Torts (3d Ed.) 354.
'Two elements are necessary: First, an ulterior
purpose; second, an act in the use of the process not
proper in the regular prosecution of the proceeding.'
Id., 355; 1 Jaggard, Torts, § 203; Hale on Torts, § 185.
'An abuse of legal process is where it is employed for
some unlawful object not the purpose intended by law. It is
not necessary to show either malice or want of probable
cause, nor that the proceeding had terminated, and it is
immaterial whether such proceeding was baseless or
not.' Mayer v. Walter, 64 Pa. 283. The
distinction has been clearly stated. Jackson v. Telegraph
Co., 139 N.C. 356 [51 S.E. 1015, 70 L. R. A. 738]."
Judge
Cooley tells us that a suit for malicious prosecution will
lie. We said in Wright v. Harris, supra, that an abuse of
process consists in its employment for some unlawful purpose
which it was not intended by the law to effect, and amounts
to a perversion of it, and that the illegality or
maliciousness of the proceeding leading up to it does not
determine its abuse in law as much as the unlawful or
oppressive use of it, after it is issued, for the purpose of
coercing or harassing the defendant in some way, citing
numerous cases; and, referring to Ludwick v. Penny, supra,
and to the principle as stated by Judge Cooley, we said:
"Speaking
of the malicious abuse of process, he [Judge Cooley]
distinguishes it from a malicious civil suit, where there
is an interference with property or business, as follows:
'If process, either civil or criminal, is willfully
made use of for a purpose not justified by the law, this is
abuse for which an action will lie. The following are
illustrations: Entering a judgment and suing out an
attachment for an
amount greatly in excess of the debt; causing an arrest for
more than is due; levying an execution for an excessive
amount; causing an arrest when the party cannot procure
bail and keeping him imprisoned until, by stress thereof,
he is compelled to surrender property to which the other is
not entitled. In these cases proof of actual malice is not
important, except as it may tend to aggravate damages; it
is enough that the process was willfully abused to
accomplish some unlawful purpose. "Two elements are
necessary to an action for the malicious abuse of legal
process: First, the existence of an ulterior purpose, and,
second, an act in the use of the process not proper in the
regular prosecution of the proceeding. Regular and
legitimate use of process, though with a bad intention, is
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