Kunz v. Johnson

• Decision Date: 14 February 1953
• Docket Number: Nos. 9316-,s. 9316-
• Citation: 74 S.D. 577,57 N.W.2d 116
• Parties: KUNZ v. JOHNSON (two cases). r, 9329-a.
• Court: South Dakota Supreme Court

Page 116

57 N.W.2d 116

74 S.D. 577

KUNZ v. JOHNSON (two cases).

Nos. 9316-r, 9329-a.

Supreme Court of South Dakota.

Feb. 14, 1953.

James O. Berdahl, Sioux Falls, for appellant and respondent on cross-appeal.

Danforth & Danforth, Sioux Falls, for respondent and appellant on cross-appeal.

SMITH, Judge.

This appeal and the cross-appeal involve two separate causes of action. In his first cause of action plaintiff claimed damages from defendant for an assault and battery. In his second cause of action plaintiff claimed damages from defendant for an alleged malicious prosecution. Both causes of action were submitted to the jury, and resulted in a verdict on the cause of action first mentioned for $1250 actual damages, and $1250 punitive damages, and on the second cause of action for $5,000 actual damages and $7,500 punitive damages. Thereafter a motion for judgment notwithstanding the verdict or for a new trial was made by defendant. The trial court granted defendant's motion for judgment notwithstanding the verdict on the second action, and made an order in the first cause of action granting a new trial if plaintiff failed to consent to the reduction of his verdict to $2,000. Such a consent was filed and an order was made denying the motion for judgment or a new trial in the first cause of action. The defendant has appealed from the judgment in the first cause of action and plaintiff has filed an appeal from the judgment in the second cause of action. We shall dispose of both appeals in a single opinion.

The pertinent facts are largely undisputed. Prior to March 1949 the defendant Johnson had been operating an electrical wiring and construction business and a coin machine business at a single location in Sioux Falls, and plaintiff Kunz had been working for Johnson in the electrical business. On the 8th day of March 1949 Johnson and Kunz entered into articles of partnership to carry on the electrical business which contained the following provisions, viz.,

'The partners shall share in the profits and losses in accordance with the following terms: Joe Johnson, now the owner of a going business, by these articles agrees to form a partnership with Bernard M. Kunz and to sell to him a one-tenth (1/10) interest in said business * * * for the sum of One Thousand and no/100 Dollars * * *. Said Bernard M. Kunz shall have the privilege of purchasing an additional 15% of said business, on basis of present inventory value, for the sum of One Thousand Five Hundred and no/100 Dollars ($1,500.00), excess or depleted inventory value to be added or substracted from said price, * * *. Such partners to share in profits and losses in the proportion as their respective ownership of the business stands.'

In August 1950 plaintiff Kunz borrowed $1500 from a Sioux Falls bank and paid it to defendant Johnson. At that time Johnson executed and delivered to Kunz a bill of sale which described 'Green Electric Co., 417 So. Phillips Ave.; name; wiring business; all wiring materials; all shop wiring tools; desk; filing cabinet; Ford truck; all wiring accounts, rights and good will'.

Defendant Johnson testified that this bill of sale was demanded by the bank before they would loan Kunz the $1500. Kunz claimed that he demanded the bill of sale for his protection. Both parties admit that in connection with the payment of $1500 to Johnson, they executed and delivered a writing reading as follows:

'8/14/50 Bernard M. Kunz and Joe Johnson. Having received $1500 from Bernard M. Kunz I relinquish 1/4 one-fourth interest in the Green Electric Co., as per the original contract forming the partnership. For a further sum of $2,000, payable at $50 per month or in multiples of $50, Bernard M. Kunz may purchase and become the sole owner of the Green Electric business, accounts and equipment pertaining to wiring. At all times the option to buy at $2,000 will remain in force at the discretion of Bernard M. Kunz. Bernard M. Kunz--Joe Johnson'.

Shortly thereafter, at a time not fixed by the evidence, Kunz exercised his option and commenced to pay monthly installments on the described $2,000 purchase price.

The electrical business and the coin machine business were continued at the same location under an agreement for a division of the rent and utility charges. Thereafter Johnson occupied himself with his coin machine business but the evidence discloses that he did subsequently assist in some described estimating on construction jobs, that he renewed the city electrical construction license and executed a lease in which the Green Electric is named as lessee.

In the course of an altercation between the parties in their place of business on the evening of June 7, 1951, the defendant Johnson knocked Kunz down with a single blow. The first cause of action above mentioned is predicated on that alleged assault and battery. Because of the view we are presently to express we find it unnecessary to describe the events of that evening.

By the time of the assault and battery in June 1951 Kunz had paid Johnson $400 on the above described purchase price and it is undisputed that he was behind at least one payment. He also was indebted to Johnson on some other small items.

To represent him in connection with a criminal charge of assault and battery, which Kunz had made against him, defendant Johnson employed a respected and experienced member of the Sioux Falls bar. Thereafter Johnson took all of his papers in connection with the electrical business to that lawyer and sought his advice as to steps he should take to protect his interests. He testified that he told his lawyer the whole story and followed his advice. The lawyer testified as a witness and fully corroborated the testimony of Johnson. Acting through that lawyer defendant Johnson on June 28, 1951 started an action in the circuit court, Minnehaha county, in which he alleged that he and Kunz were partners, asked for an accounting and a winding-up of the partnership. In that action he asked for the appointment of a receiver. Based upon the complaint and an affidavit of Johnson the court issued an order requiring Kunz to show cause why a receiver should not be appointed. The order to show cause contained a provision enjoining Kunz from disposing of any of the partnership property. After hearing on the order to show cause the circuit court determined that the partnership had been dissolved, and denied the application for a receiver.

The second cause of action in plaintiff's complaint is predicated upon the above described proceedings, and in substance alleges that said action was commenced and said temporary restraining order was procured maliciously without reasonable cause for the purpose of injuring plaintiff Kunz in his person and business; and that the circuit court determined that the action was commenced without cause, dismissed the receivership proceedings and dissolved the restraining order. The answer admitted the bringing of the action and the making of an application for the appointment of a receiver as alleged, but denied the remaining allegations of the cause of action.

Our convenience will be served by giving prior consideration to the cross-appeal. The contention is that the evidence is sufficient to support the verdict for damages for malicious prosecution, and therefore that the trial court erred in granting defendant's motion for judgment notwithstanding the verdict. We turn to a consideration of that contention.

It has been said, 'A malicious prosecution is one that is begun in malice, without probable cause to believe it can succeed, and which finally ends in failure.' Burt v. Smith, 181 N.Y. 1, 5, 73 N.E. 495, 496. The elements of 'malicious prosecution' are (1) the commencement or continuance of an original criminal or civil judicial proceeding; (2) its legal causation by the present defendant against plaintiff, who was defendant in the original proceeding; (3) its bona fide termination in favor of the present plaintiff; (4) the absence of probable cause for such proceeding; (5) the presence of malice; (6) damage...