Carver v. Lykes, 100

• Decision Date: 10 July 1964
• Docket Number: No. 100,100
• Parties: A. G. CARVER v. Norman R. LYKES.
• Court: North Carolina Supreme Court

Page 139

137 S.E.2d 139

262 N.C. 345

A. G. CARVER v. Norman R. LYKES.

No. 100

Supreme Court of North Carolina.

July 10, 1964

Harold K. Bennett and Don C. Young, Asheville, for plaintiff.

Redden, Redden & Redden, Hendersonville, for defendant.

SHARP, Justice.

(1) Plaintiff's Action

The common law action for malicious prosecution was originated as a remedy for unjustifiable criminal prosecutions. However, in North Carolina and many other states, the right of action has been extended to include the malicious institution of civil proceedings which involve an arrest of the person or seizure of property or which result in some special damage. Ely v. Davis, 111 N.C. 24, 15 S.E. 878; Jerome v. Shaw, 172 N.C. 862, 90 S.E. 764; Chatham Estates v. American Nat. Bank, 171 N.C. 579, 88 S.E. 783 (lis pendens); Nassif v. Goodman, 203 N.C. 451, 166 S.E. 308, 86 A.L.R. 215 (Involuntary bankruptcy); Brown v. Guaranty Estates Corp., 239 N.C. 595, 80 S.E.2d 645, 40 A.L.R.2d 1094 (Malicious and wrongful attachment); 3 Strong, N. C. Index, Malicious Prosecution § 2.

The weight of authority in this country now supports the view that, under certain circumstances, an action for malicious prosecution may be predicated upon the prosecution, institution, or instigation of an administrative proceeding where such proceeding is adjudicatory in nature and may adversely affect a legally protected interest. National Surety Co. v. Page, 58 F.2d 145 (4th Cir.1932); Melvin v. Pence, 76 U.S.App.D.C. 154, 130 F.2d 423, 143 A.L.R. 149; Restatement, Torts § 680 (1938); 34 Am.Jur., Malicious Prosecution § 19.1 (Supp.1963); Prosser, Torts § 99 (1955); See also Toft v. Ketchum, 18 N.J. 280, 113 A.2d 671, 673, 52 A.L.R.2d 1208.

In Melvin v. Pence, supra, Rutledge, J., pointed out:

'* * * Much of the jurisdiction formerly residing in the courts has been transferred to administrative tribunals, and much new jurisdiction involving private rights and penal consequences has been vested in them. In a broad sense their creation involves the emergence of a new system of courts, not less significant than the evolution of chancery. The same harmful consequences may flow from the groundless and malicious institution of proceedings in them as does from judicial proceedings similarly begun. When one's livelihood depends upon a public license, it makes little difference to him whether it is taken away by a court or by an administrative body or official. Nor should his right to redress the injury depend upon the technical form of the proceeding by which it is inflicted. The administrative process is also a legal process, and its abuse in the same way with the same injury should receive the same penalty.'

It follows that one who instigates or procures investigatory proceedings against another before an administrative board which has the power to suspend or revoke that other's license to do business or practice his profession, is liable for the resulting damage if (1) the proceeding was instituted maliciously; (2) without probable cause; and (3) has terminated in favor of the person against whom it was initiated. In such a suit for malicious prosecution the plaintiff may recover for any resulting loss of business, injury to reputation, mental suffering, expenses reasonably necessary to defend himself against the charge, and any other loss which proximately resulted from the defendant's wrongful action. If actual malice is established the jury may allow punitive damages. Brown v. Guaranty Estates Corp., supra; Pressley v. Audette, 206 N.C. 352, 173 S.E. 905; Newton v. McGowan, 256 N.C. 421, 124 S.E.2d 142.

G.S. 93A makes it unlawful for any person to act as a real estate salesman or broker without first obtaining a license from the North Carolina Real Estate Licensing Board. G.S. § 93A-6 empowers the Board to suspend or revoke such license for such misconduct as therein specified. It also provides that upon the filing of a written, verified complaint which makes out a prima facie case of such misconduct, the Board shall, after due notice, hold a hearing and investigate the actions of the realtor whose conduct has been called into question.

Of course, before a defendant can be held liable in any action for malicious prosecution it must appear that he prosecuted, instituted, or instigated the administrative proceeding of which the plaintiff complains. This fact, unless admitted, must be established by the first issue. In the trial below the jury disposed of plaintiff's action by a negative answer to the first issue which was stated: 'Did the defendant institute and prosecute an action before the North Carolina Real Estate Licensing Board against the plaintiff to revoke or suspend his Broker's Real Estate License, as alleged in the Complaint?' With reference to this issue the court charged the jury as follows:

'So the Court instructs you, members of the jury, that if you find from this evidence and by its greater weight, that the defendant did file with the Board the complaints in question, and that at the time he did so that he did so for the purpose of revoking the license, revoke or suspend the broker's or real estate license of the plaintiff, Mr. Carver, then it would be your duty to answer this first issue YES. If you do not so find, you will answer it NO, or, if upon a fair and impartial consideration of all the facts and circumstances in the case, if you find the evidence of equal weight, you will answer it NO.' (Italics ours).

The plaintiff's assignment of error to the foregoing portion of the charge must be sustained. The defendant testified that in filing the charges it was never his purpose to cause a revocation of plaintiff's license; that he was merely ringing to the attention of the Board what Mr. Carver had done' to him. However, the charges filed by defendant required the Board to investigate the plaintiff's conduct and, if found to be true, they constituted grounds for the revocation of his license under G.S. § 93A-6. Having thus invoked the statute, the defendant may no more say that in filing the complaint it was not his purpose to jeopardize the plaintiff's license than a defendant in any ordinary malicious prosecution action would be heard to say that in swearing out a warrant it was not his purpose to convict the person he had charged with crime. 'The instigation of an administrative proceeding is sufficient where the institution of the proceeding actually follows from it.' 34 Am.Jur., Malicious Prosecution § 19.1 (Supp.1963). Moreover, the defendant's motive or purpose in instituting the proceedings in question is not material on the first issue. The defendant admitted in his answer that he filed with the Board the written, verified charges against the plaintiff which are set out in paragraphs 6 and 7 of the plaintiff's complaint. The only question rightly involved on the first issue was whether defendant instituted the proceedings of which plaintiff complained--not whether he intended to cause the revocation or suspension of plaintiff's license by so doing. In this case plaintiff's instigation of the proceedings is not an issue. His admission in the answer established that he had done so. G.S. § 1-159; Davis v. Rigsby, 261 N.C. 684, 136 S.E.2d 33; Fairmont School v. Bevis, 210 N.C. 50, 185 S.E. 463. The first issue in this case, if submitted, should have been answered YES by the court. For the error in the charge with reference to it there must be a new trial.

(2) Defendant's First Counterclaim

Plaintiff's thirtieth assignment of error is to the failure of the court to sustain his motion for judgment as of nonsuit as to defendant's first counterclaim. In defendant's words at the trial, the basis of his first counterclaim was that plaintiff 'was grossly negligent because he didn't go around to the neighbors and find out either what was offered by the Carolina Power and Light Company for the property or what transactions had taken place and actually what prices' neighboring property brought.

'A real estate agent with whom property is listed for sale or exchange acts in a fiduciary capacity, if he accepts the proffered employment. It is his duty to obtain for his principal the largest price possible, or in case of an exchange the most advantageous trade.' Devine v. Hudgins, 131 Me. 353, 163 A. 83.

The duty which a real estate broker engaged to sell land owes to his principal is stated in 12 Am.Jur.2d, Brokers § 96 as follows:

'As a general rule, a broker who is not a mere middleman, but is employed by a principal to act as his agent in a transaction, is bound to exercise reasonable care and skill, or the care and skill ordinarily possessed and used by other persons employed in a similar undertaking. He must exert himself with reasonable diligence in his principal's behalf, and is bound to obtain for the latter the most advantageous bargain possible under the circumstances of the particular situation. Thus, a broker employed to sell property has the specific duty of exercising reasonabe care and diligence to effect a sale to the best advantage of the principal--that is, on the best terms and at the best price possible.' See also Annot., Liability of real-estate broker to principal for negligence in carrying out agency, 94 A.L.R.2d 468; 12 C.J.S. Brokers § 26.

It was, as defendant contends, the plaintiff's duty to determine the reasonable market value of defendant's property before attempting to effect a sale of it and, under the circumstances, he had the right to rely upon plaintiff's knowledge and advice without making an independent investigation himself. In cases involving real estate brokers, where the negligence of the broker in obtaining an adequate price is set up, either as the basis for a cause of action in tort against him or as a defense to his action to recover a commission, courts have ruled in favor of the property owners where there was evidence of a substantial variation in the real value of the property and...