Clanan v. Nushzno

• Decision Date: 03 January 1933
• Docket Number: No. 180.,180.
• Citation: 246 N.W. 168,261 Mich. 423
• Parties: CLANAN v. NUSHZNO et al.
• Court: Michigan Supreme Court

261 Mich. 423

246 N.W. 168

CLANAN

v.NUSHZNO et al.

No. 180.

Supreme Court of Michigan.

Jan. 3, 1933.

Appeal from Circuit Court, Wayne County; Arthur W. Kilpatrick, Circuit Judge.

Action by Nicholas J. Clanan against David Nushzno and the John Hancock Mutual Life Insurance Company. From a judgment in favor of plaintiff, defendants appeal.

Judgment reversed without new trial as to defendant insurance company, and new trial granted to first-named defendant.

Argued before the Entire Bench except FEAD, J.Angell, Turner, Dyer & Meek, of Detroit, for appellants.

Ira F. Morgan, of Detroit, for appellee.

McDONALD, C. J.

This is an action to recover damages for malicious prosecution based on a sworn complaint of defendant David Nushzno in criminal proceedings wherein the plaintiff was charged with the embezzlement of money belonging to the defendant insurance company.

In February, 1921, David Nushzno was superintendent of a branch district of the John Hancock Mutual Life Insurance Company in the city of Detroit, Mich. The plaintiff was employed on a commission basis as agent to solicit insurance and to collect premiums. He worked out of Mr. Nushzno's office in designated territory and was responsible to him for his work. In May, 1926, Nushzno claims to have discovered a shortage in the plaintiff's accounts, that he had collected premiums from policyholders which he failed to pay over to the company. Plaintiff quit his employment. After an investigation of his accounts, a shortage was reported to the defendants' bonding company, the Employers' Liability assurance Corporation, Limited. The corporation paid the amount of the shortage and took an assignment from the John Hancock Mutual Life Insurance Company of its claims against the plaintiff. Subsequently, at the request of the bonding company, Mr. Nushzno made complaint to the prosecuting attorney of Wayne county charging the plaintiff with embezzlement. On this complaint a warrant was issued. The plaintiff was arrested, but later the criminal proceedings were dismissed and he was discharged. Thereafter, he promptly brought this suit; and, on the trial by the court and jury, was given a verdict for $7,500. On motion for a new trial, he consented to remit from the verdict all in excess of $3,000 for which amount judgment was entered in his favor. The defendants have appealed.

1. The first question presented as cause for appeal is the refusal of the court to direct a verdict in favor of the defendants on the ground that probable cause was established as a matter of law by the undisputed facts.

When the material facts are undisputed and in the opinion of the court constitute probable cause, he should direct a verdict in favor of the defendant. When the facts are in dispute, the question is for the jury with instructions as to what constitutes probable cause.

‘The general rule of the common law, sustained by the overwhelming weight of authority, both in England and America, is that what facts, and whether particular facts, constitute probable cause is a question of law, which the judge must decide upon the facts found to exist in the particular case, and which it is error for him to submit to the decision of the jury.’ 18 R. C. L. § 39, p. 58.

‘Probable cause is such reasonable ground of suspicion, supported by known circumstances, or by information of sufficient character, to justify an ordinarily cautious person in believing that the accused is guilty of the alleged crime.’ Gilecki v. Dolemba, 189 Mich. 107, 155 N. W. 437.

‘Facts which would justify a reasonably prudent man in asking that a jury pass upon accused's guilt would justify defendant in making the complaint.’ Weiden v. Weiden, 246 Mich. 347, 224 N. W. 345.

In instituting these criminal proceedings, the law required of Mr. Nushzno that he act in good faith, believe in the plaintiff's guilt, and have a knowledge of facts tending to support such belief. It was not sufficient that he have knowledge of facts showing that the plaintiff was short in his accounts. It must also appear that he had knowledge of facts tending to show that he intended to embezzle the funds he had collected, intended to convert them to his own use. There was ample evidence of the shortage. The plaintiff admitted it orally and in writing, so there was probable cause for believing that he had collected and retained funds of his employer. But on the question of intent, the facts within Nushzno's knowledge were not undisputed. The plaintiff claimed the right to retain the collections in payment of commissions. When he was told of the shortage, Nushzno presented to him for his signature a shortage slip, Exhibit 6. The plaintiff testified: ‘When I signed the slip, Exhibit 6, Mr. Nushzno said I was short and I says, if I remember right, ‘Well I will sign that slip. I have enough coming on ordinary and weekly insurance premium insurance to cover that.’

Under the plaintiff's employment contract he was not given the right to deduct his commissions from collections but by custom known to and acquiesced in by Nushzno, it was his practice and that of other agents to make such deductions and pay the balance to the cashier. Nushzno knew that the plaintiff was claiming commissions with which he had not been credited. He had knowledge of facts sufficient to justify him in believing that his company had paid all commissions but some of these facts were disputed, so it became a question for the jury to determine whether Mr. Nushzno was justified in believing that the plaintiff was guilty of embezzlement.

A further reason advanced by the defendants for the direction of a verdict on the issue of probable cause was that he fully and fairly submitted all of the material facts within his knowledge to the prosecuting attorney who recommended that the warrant issue.

If the defendant so stated the facts to the prosecuting attorney and relied on his recommendation in signing the complaint, that would be a complete defense to this action. It would constitute probable cause. The record shows that he presented to an...