Hubbard v. Beatty & Hyde, Inc.

• Decision Date: 01 December 1961
• Citation: 178 N.E.2d 485,343 Mass. 258
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Joseph E. HUBBARD v. BEATTY & HYDE, INC. and another.

Page 485

178 N.E.2d 485

343 Mass. 258

Joseph E. HUBBARD v. BEATTY & HYDE, INC. and another.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Oct. 3, 1961.

Decided Dec. 1, 1961.

Joseph R. Nolan and Edward I. Perkins, Boston, for plaintiff.

Marshall Simonds and Samuel L. Batchelder, Jr., Boston, for defendants.

Before WILKINS, C. J., and SPALDING, CUTTER, KIRK and SPIEGEL, JJ.

SPALDING, Justice.

The plaintiff brings this action of tort to recover for damage allegedly sustained by him by reason of a petition brought by Beatty & Hyde, Inc., on May 27, 1958, seeking to have him adjudicated a bankrupt. The declaration contains two counts: in one, Beatty & Hyde, Inc., is the defendant, and it is alleged that it instituted the bankruptcy proceedings; in the other, Charles K. Beatty, president and treasurer of Beatty & Hyde, Inc., is the defendant, and it is alleged that he caused the bankruptcy proceedings to be brought by the corporation. Malicious prosecution is the basis of recovery under each count. Each defendant demurred on the ground, among others, that the declaration was insufficient in law to enable the plaintiff to maintain the action and this is the only ground that need be considered. The demurrers were sustained and the plaintiff appealed.

Since the issue upon which we dispose of the case is common to both counts, we shall confine our discussion to the first count. The declaration, which incorporates the bankruptcy petition and the report of a special master, ¹ sets forth the following: On July 29, 1957, the corporate defendant (Beatty) purchased from Joseph E. Hubbard, the plaintiff, a lot (No. 3163) of scoured wool. The wool at that time was in the scouring plant of Lawrence Wool Scouring Co., Inc. (Lawrence), in Lawrence. Beatty, on August 5, 1957, paid Hubbard $14,038.84, the purchase price for the wool, and shortly thereafter Hubbard delivered to Beatty a delivery order on Lawrence for the wool. Without seeking delivery of the wool from Lawrence, Beatty made repeated attempts to sell it. In March, 1958, Beatty obtained a customer for the wool and presented the delivery order to Lawrence. Lawrence refused to deliver the wool because there were unpaid charges (in excess of $7,000) due it from Hubbard for the scouring of lot 3163 and several other lots. Beatty, when it purchased the wool from Hubbard, had no knowledge of the existence of any lien for scouring charges. In April, 1958, wool was released by Lawrence to the Top Company and charges (about $2,500) on this wool, which was not part of lot 3163, were paid. After this release, a balance of over $5,000 remained due from Hubbard to Lawrence.

On May 27, 1958, Beatty, as a single creditor, brought a petition in bankruptcy against Hubbard in the Federal Court for the District of Massachusetts, alleging that Hubbard, being insolvent, committed acts of bankruptcy by transferring wool to Top Company, in payment of an antecedent debt owed by Hubbard to Top Company, and by paying sums of money to Lawrence on account of antecedent debts. It was alleged that such transfers constituted unlawful preferences. The special master, to whom the case was referred, recommended in his report that the petition be dismissed on the ground that Beatty did not have a claim 'liquidated as to amount,' as required by § 59, sub. b of the Bankruptcy Act [11 U.S.C.A. § 95, sub. b]. Beatty, 'through its attorney, assented to this report.' The bankruptcy petition, it is alleged, was brought 'maliciously' and 'without probable cause and for [the] purpose of destroying the credit, reputation and business' of Hubbard.

Whatever the law may be elsewhere (see Prosser on Torts [2d ed.] p. 662), the action for malicious prosecution in this Commonwealth is not confined to the wrongful initiation of criminal proceedings; it may be maintained for the unjustifiable initiation of a civil action. Rosenblum v. Ginis, 297 Mass. 493, 497, 9 N.E.2d 525. See Restatement: Torts, § 674. And we have no doubt that this remedy is available to one against whom bankruptcy proceedings have been improperly instituted. Wilkinson v. Goodfellow-Brooks Shoe Co., 141 F. 218 (C.C.E.D.Mo.). Norin v. Scheldt Mfg. Co., 297 Ill. 521, 130 N.E. 791. Nassif v. Goodman, 203 N.C. 451, 166 S.E. 308, 86 A.L.R. 215. Farley v. Danks, 4 El. & Bl. 493. Quartz Hill Gold Consol. Mining Co. v. Eyre, 11 Q.B.D. 674. Restatement: Torts, § 678. In order to prevail in such an action, the plaintiff must establish that the original action was brought maliciously and without probable cause, and has been terminated in favor of the plaintiff. Rosenblum v. Ginis, supra, 297 Mass. at page 497, 9 N.E.2d 525. Restatement: Torts, § 678. 'Generally speaking, the same conditions are necessary to support a tort action for the malicious prosecution of civil proceedings as in the case of criminal proceedings.' Harper and James, Law of Torts, p. 328. But it has been said--and with good reason--that 'less in the way of grounds for belief will be required to justify a reasonable man in bringing a civil rather than a criminal [proceeding].' Prosser on Torts (2d ed.) p. 665. The distinction in this respect between actions based on criminal prosecutions and those arising out of civil proceedings has been stated in Restatement: Torts, § 674, comment c, as follows: '[A] prosecution for a criminal offense is not justified unless the prosecutor believes and has probable cause for believing that the person against whom the proceedings are brought is guilty of the crime charged * * *. Belief, even if reasonable, in the possible guilt of the accused is...