Johnson v. Land Title Bank & Trust Co.
| Decision Date | 21 March 1938 |
| Docket Number | 367 |
| Parties | Johnson, Appellant, v. Land Title Bank & Trust Company et al |
| Court | Pennsylvania Supreme Court |
Argued January 6, 1938
Appeal, No. 367, Jan. T., 1937, from judgment of C.P. No. 1 Phila. Co., March T., 1934, No. 8050, in case of Edwin N Johnson v. The Land Title Bank & Trust Company and Industrial Trust Company. Judgment affirmed.
Trespass for conspiracy and malicious prosecution. Before HEILIGMAN, J.
The opinion of the Supreme Court states the facts.
Compulsory nonsuit entered. Motion to take it off refused. Plaintiff appealed.
Error assigned was refusal to take off nonsuit.
The judgment is affirmed.
Milford J. Meyer, with him Robert M. Bernstein and H. Eugene Gardner, for appellant.
Edmund R. Finegan and Elias Magil, with them Walter Biddle Saul, of Saul, Ewing, Remick & Saul, and Sterling & Willing, for appellees.
Before KEPHART, C.J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES, JJ.
Appellant brought suit against the two appellee banks for maliciously conspiring to injure his credit and business reputation by filing against him unsuccessfully an involuntary petition in bankruptcy. Appellant was nonsuited and the court below refused to take it off. This appeal followed. The nonsuit was entered because the court believed that appellant failed to prove want of probable cause for the filing of the aggrieving petition. It is conceded by appellant that there was no proof of conspiracy.
In Mayer v. Walter, 64 Pa. 283, this Court, in an opinion by Justice SHARSWOOD, pointed out the distinction between a malicious use and a malicious abuse of legal process. See also Garland v. Wilson, 289 Pa. 272, 137 A. 266, and Beadle v. Friel, 320 Pa. 560, 183 A. 761. In actions based on the malicious use of legal process in criminal proceedings, for a purpose which the law intended the process to effect, both malice and want of probable cause must be proved. This same principle applies to actions based on the malicious use of legal process in civil proceedings, for a purpose which the law intended the process to effect. It is not proved by a termination of the proceedings favorable to the defendant in those proceedings (who has become the plaintiff in the action for malicious prosecution). In Altman v. Standard Refrigerator Co., Inc., 315 Pa. 465, 173 A. 411, we held that to make out a case of malicious prosecution the burden is upon the plaintiff to prove affirmatively, by circumstances or otherwise, that the defendant had no reasonable or probable cause for instituting the original criminal proceedings, and that the prosecution was malicious. This must be proved in addition to the termination of the proceedings in favor of the defendant in those proceedings. However, proof of want of probable cause and of malice may be founded on circumstantial evidence. See Payne v. East Liberty Spear Co., 323 Pa. 100, 185 A. 853, and Stinson v. Smith et al., 329 Pa. 177, 196 A. 843.
The record before us shows that appellant in his role of plaintiff below failed to sustain the burden the law cast upon him. On the contrary, defendants (appellees here) appear to have had persuasive reasons for filing against the present appellant an involuntary petition in bankruptcy. Appellant was for many years an extensive real estate operator. He amassed a considerable fortune from operating in real estate in the suburbs of Philadelphia and in Montgomery and Bucks Counties. However, in the fall of 1931 almost all of appellant's real estate holdings had become encumbered with mortgages. At that period the real estate market was in a precarious condition. In October, 1931, a mortgage bond for $8,000 was placed on record against appellant. This fact aroused apprehensions in the officials of appellee banks as to appellant's financial condition. In December it was learned that appellant's books showed a debt of $32,000 due to his wife which indebtedness did not appear on appellant's financial statements. Appellant told the bank officials that this was not to be considered a "liability," being "a mere family transaction."
On January 15, 1932, appellant owed the Land Title Bank & Trust Company $44,000 and the Industrial Trust Company $7,800. He charged in his statement of claim that these obligations were both unmatured and adequately secured. As a matter of fact, as appellant admitted on cross-examination, neither was the case. Yet on that day he withdrew from his bank accounts the sum of $20,000 in cash, a sum constituting practically his entire cash assets, and applied it to the purchase of an annuity for his wife. He testified that his purpose in doing so was to strip his business of its cash assets, and that if he had had more cash available, he would have bought a larger annuity. He could give no excuse for disposing of his assets in this manner except to state that the annuity seemed attractive and he felt his business was large enough to afford it -- an excuse which to his creditors might well seem to break down under the weight of the overdue obligations of him who advanced it.
When appellees learned of this large cash withdrawal, they promptly demanded that the annuity contract be rescinded and the cash returned. This demand availed nothing. Appellant pointed to a $15,000 savings deposit in the Land Title Bank & Trust Company as indicating an adequate amount of cash on hand to meet his business needs. However, this fund had been deposited in appellant's name as security for the payment of rent by one of his tenants, and cannot be considered in the same light as a general deposit available for all needs. It was at least doubtful whether it could be used by appellant at all. About this time the Land Title Company decided to apply this fund on appellant's indebtedness to it, and on its doing so litigation arose which terminated in this court, where it was decided that the bank as a creditor of Johnson had a right to appropriate this fund by way of set-off: Handle, to use, v. Real Estate-Land Title & Trust Co., 316 Pa. 116, 173 A. 313.
From January until March, 1932, negotiations proceeded between appellant and his creditors, including appellees, looking toward a possible solution of his financial difficulties. Appellant persisted in his refusal to cancel the annuity and he had no cash to meet his obligations. His real estate was wholly encumbered by mortgages approximating between $600,000 and $700,000. Nine-tenths of these mortgages, including all the income-producing lands, had been taken over by mortgagees in possession. Appellant's debts amounted to half a million dollars, and for their...
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