Ellis County State Bank v. Keever

• Decision Date: 03 September 1994
• Docket Number: No. D-3413,D-3413
• Parties: ELLIS COUNTY STATE BANK, Tracy Fletcher, John A. Hastings, Jr., and Don Harris, Petitioners, v. Glenn KEEVER, Respondent.
• Court: Texas Supreme Court

Page 790

888 S.W.2d 790

ELLIS COUNTY STATE BANK, Tracy Fletcher, John A. Hastings, Jr., and Don Harris, Petitioners, v. Glenn KEEVER, Respondent.

No. D-3413.

Supreme Court of Texas.

Argued Sept. 14, 1993.

Decided June 22, 1994.

Rehearing Overruled Sept. 3, 1994.

R. Brent Cooper, Dallas, for petitioners.

Robert E. Wood, Dallas, for respondent.

GONZALEZ, Justice, delivered the opinion of the court in which all members of the Court join in sections I and II.

HIGHTOWER, DOGGETT, GAMMAGE and SPECTOR, JJ., join in sections III and IV.

PHILLIPS, C.J., and HECHT, CORNYN and ENOCH, JJ., join in sections V and VI.

The motions for rehearing are overruled. The opinions of the Court previously issued in this case are withdrawn and the following are substituted in their place.

In this action for malicious prosecution, we determine that the ordinary burden of proof by a preponderance of the evidence remains appropriate rather than the more extraordinary burden of clear and convincing evidence; we hold that the plaintiff is not entitled to prejudgment interest on punitive damages, and we remand this cause to the court of appeals with instructions that they reconsider the Bank's punitive damage points in light of the standards we articulated in Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 31 (Tex.1994). We further decline to obligate the courts of appeals to detail supportive evidence when affirming the sufficiency of the evidence underlying a trial court judgment.

This suit arises out of the indictment and arrest of Glenn Keever. In February 1987, Keever executed a 90-day note for $6,000 with First State Bank of Milford, secured by an interest in his office equipment. Shortly before the due date, Keever filed for Chapter 13 bankruptcy protection. In June 1987, Don Harris purchased all of the assets of First State Bank, including Keever's note, and renamed the bank the Ellis County State Bank.

The parties hotly dispute the ensuing events. Keever testified that when Tracy Fletcher, a bank vice president, first called to discuss the repayment of the note, Keever informed her of the bankruptcy proceeding and provided his attorney's name and the case number. Fletcher nevertheless continued to telephone Keever about the note and sent him a registered letter asserting a default and making formal demand for payment in full or return of the collateral. Keever testified that he telephoned Fletcher to inform her of a creditors' meeting scheduled for October 23, 1987. At that meeting, the bankruptcy court instructed Keever to turn over the collateral to the Bank. According to Keever, in November 1987 Fletcher failed to keep an appointment to pick up the collateral. In the summer of 1988, John A. Hastings, Jr., an attorney for the Bank, made arrangements through Keever's bankruptcy attorney to collect the collateral; again, the Bank failed to keep the appointment.

The Bank has a significantly different version of the events in which, after failing to respond to a number of past due notices and telephone messages, Keever finally agreed to make a payment and sign a new note, but later refused. Fletcher then made a formal written demand for the collateral in August, 1987, and was not advised by Keever until October of the earlier bankruptcy filing in May. Following several unsuccessful attempts to retrieve the collateral, Hastings sought an appointment with the grand jury to seek an indictment against Keever for hindering a secured creditor. After making this appointment, Hastings continued to attempt to negotiate with Keever's bankruptcy attorney regarding the collateral. Meanwhile, Keever relocated the collateral in violation of the security agreement and without notifying the Bank. While bringing the matter to the attention of the Ellis County grand jury in December 1987, the Bank waited until November 1988 to pursue an indictment against Keever for hindering a secured creditor. ¹ Based upon the testimony of Fletcher and Hastings, Keever was indicted on November 29, 1988. ² Keever turned himself into the police on December 2. Arrested and incarcerated until he made bail, ³ Keever pled not guilty, and eventually had his indictment quashed by the district court. Declining to seek reindictment, the district attorney indicated that she had not learned of the bankruptcy until the arraignment, contradicting claims of Fletcher and Hastings that they had informed the grand jury of this filing.

In his subsequent malicious prosecution action against Harris, Fletcher, Hastings, and the Bank, Keever testified that as a result of the indictment and arrest he suffered from post-traumatic stress disorder and depression. Based on a jury verdict, the trial court rendered judgment for Keever against all defendants, and awarded Keever actual and punitive damages, as well as prejudgment interest. ⁴ The court of appeals reversed the judgment as to prejudgment interest on the punitive damages, but otherwise affirmed. 870 S.W.2d 63.

I. Malicious Prosecution--Burden of Proof

The defendants contend that the trial court erred in instructing the jury that the plaintiff must prove the elements of malicious prosecution by a preponderance of the evidence, rather than by clear and convincing evidence. This contention conflicts with our writing that "[n]o doctrine is more firmly established than that issues of fact are resolved from a preponderance of the evidence." Sanders v. Harder, 148 Tex. 593, 227 S.W.2d 206, 209 (1950) (trespass to try title). Over a century ago this Court rejected the view that

facts [must] be established by evidence with that absolute certainty ... that excludes all reasonable doubt of their existence, as if it were a case of murder or treason, [this] is not a rule applicable to this or any other civil cause.

Sparks v. Dawson, 47 Tex. 138, 145 (1877) (fraudulent conveyance). Seeking to avoid a blurring of the distinction between civil and criminal cases, we have regularly found reversible error when a trial court instructed a jury that a greater burden must be met. See Bluntzer v. Deewes, 79 Tex. 272, 15 S.W. 29, 30 (1891) (reversible error in charge requiring "a preponderance of the evidence ... with such certainty as will satisfy your minds"); Wylie v. Posey, 71 Tex. 34, 9 S.W. 87, 88-90 (1888) (reversible error in charge requiring "a sufficient preponderance of the evidence, to the extent of a reasonable certainty"). Only in extraordinary circumstances, such as when we have been mandated to impose a more onerous burden, has this Court abandoned the well established preponderance of the evidence standard. ⁵

Malicious prosecution is no different. Though reference has been made to the importance of "positive, clear and satisfactory" proof ⁶, all "issues of fact are resolved from a preponderance of the evidence." Andrews v. Dewberry, 242 S.W.2d 685, 687 (Tex.Civ.App.--Fort Worth 1951, writ ref'd n.r.e.) (approving a jury instruction regarding a preponderance of the evidence standard in a malicious prosecution action). Texas is certainly not alone in this regard; we have not been made aware of any other jurisdiction that has required an enhanced burden of proof in a malicious prosecution action.

This Court has explained the occasional suggestion that facts must be established by "clear and convincing evidence" as "but an admonition to the judge to exercise great caution in weighing the evidence." Sanders, 227 S.W.2d at 209. As noted in Carl v. Settegast, 237 S.W. 238, 239-40 (Tex.Com.App.1922), admonitions of this type originate from their early usage with reference to courts of chancery:

in so far as these rules merely address themselves to the conscience of the chancellor in exercising his province to pass upon the facts or weight of the evidence, they have no place in our jurisprudence, under which ... a jury trial is given as a matter of right, and the province of the jury where the evidence is sufficient to have the issues submitted to them is absolute in determining the facts, subject only to review by the trial court and Court of Civil Appeals.

Only recently we again explained the meaning of such admonitions by relying upon Sanders to explain that a requirement of "clear and satisfactory" proof represents only

an admonition to exercise great caution in weighing the evidence and does not supplant the usual standard of proof by a preponderance of the evidence.

Rhodes v. Cahill, 802 S.W.2d 643, 645 n. 2 (Tex.1990) (adverse possession).

What we said with regard to the standard of review for malicious prosecution cases in Meadows v. Green, 524 S.W.2d 509, 510 (Tex.1975) (per curiam), is also applicable in the trial court:

The requirement of clear and convincing evidence is merely another method of stating that a cause of action must be supported by factually sufficient evidence.

Here, the trial judge correctly charged the jury to apply the traditional burden of proof by preponderance of the evidence. That burden does not change merely because trial judges are admonished to set the verdict aside and order a new trial if the judge is persuaded that the evidence is not "positive, clear and satisfactory."

Nor need we reject our state's well established jurisprudence in order to assure reasonable protection to citizens who report criminal activity to prosecuting authorities. This goal can be satisfied by demanding the full satisfaction of all of the elements of the malicious prosecution tort such as that the defendant lacked probable cause to initiate the prosecution and acted with malice. See e.g., Compton v. Calabria, 811 S.W.2d 945, 949 (Tex.App.--Dallas 1991, no writ) see also Diamond Shamrock, 753 S.W.2d at 241. One accused of malicious prosecution is rightly aided by "an initial presumption that a defendant acted reasonably and in good faith and therefore had probable cause." Akin v. Dahl, 661 S.W.2d 917, 920 (Tex.1983), cert. denied, 466 U.S. 938, 104 S.Ct. 1911, 80 L.Ed.2d 460 (1984). Protection is also...