Miller v. American Nat. Bank in Little Falls

• Decision Date: 29 October 1943
• Docket Number: No. 33360.,33360.
• Parties: MILLER v. AMERICAN NAT. BANK IN LITTLE FALLS et al.
• Court: Minnesota Supreme Court

11 N.W.2d 655

216 Minn. 19

MILLER v. AMERICAN NAT. BANK IN LITTLE FALLS et al.

No. 33360.

Supreme Court of Minnesota.

October 29, 1943.

Appeal from District Court, Morrison County; D. M. Cameron, Judge.

Consolidated malicious prosecution actions by George H. Miller against the American National Bank in Little Falls and another. Verdict was for defendants in one action and against named defendant in the other action. From an order denying named defendant's motion for judgment notwithstanding the verdict or a new trial, named defendant appeals.

Reversed with directions.

A. Gordon Rosenmeier and Charles A. Fortier, both of Little Falls, for appellant.

Swanson, Swanson & Swanson, of Brainerd, for respondent.

LORING, Justice.

Action for malicious prosecution. Plaintiff was arrested upon a complaint signed by defendant bank and Clarence Taylor charging him with concealing and disposing of mortgaged personal property. A preliminary hearing was had before a justice of the peace and the charge dismissed. Thereafter the bank signed another complaint. Plaintiff had a preliminary hearing in the municipal court of Little Falls, was bound over to the district court, tried, and acquitted. He brought two actions in the district court for malicious prosecution against the bank and F. L. Hartmann, a bank officer, one based on each complaint. The cases were tried together. There was a verdict for defendants in the case based on the charge made before the justice. Plaintiff had a verdict against the bank alone in the case based on the proceeding initiated in municipal court. The bank appeals from an order denying its motion for judgment notwithstanding the verdict or a new trial.

Clarence Taylor was the owner of certain livestock and farm machinery which was mortgaged to the bank to secure a $400 note. Mrs. H. J. Taylor obtained a judgment against Clarence and levied on his chattels, including the above mentioned mortgaged property. Through his lawyer, Clarence notified the bank (his mortgagee) that certain of the chattels were exempt and that, if it should foreclose, the bank must first exhaust the nonexempt property, upon which the levy had already been made, in satisfaction of its mortgage. The bank's mortgage was not then due. The exempt property was segregated from the nonexempt, and the execution sale of the latter, which consisted entirely of livestock, was held on November 20, 1940.

Before the sale, the deputy sheriff announced that the cattle were being sold "subject to a mortgage held by the American National Bank of Little Falls, Minnesota", as provided in the notice of levy and sale. The sale was delayed a few minutes pending the arrival of a Mr. Barton, one of the bank's officers. When he arrived he had some conversation with the deputy sheriff, the nature of which is in dispute. Plaintiff and his witnesses testified that Barton said they did not have to wait for him, that the bank was not worried, it had plenty of security. Barton, the deputy sheriff, and the attorney representing the judgment creditor at the sale all testified that nothing was said about the bank not being worried or that it had other security. Plaintiff purchased the cattle for $360.

Before paying for the cattle, plaintiff asked for a bill of sale. The deputy sheriff, being uncertain whether immediate possession of the cattle could be given, called Mr. Rosenmeier, the attorney for the bank, by telephone. He then gave plaintiff a memorandum to the effect that plaintiff was entitled to possession of the cattle. No bill of sale was given. At the same time plaintiff talked with Mr. Rosenmeier and at the latter's suggestion went to Little Falls. There he had a conference with Mr. Rosenmeier and the defendant Hartmann, an officer of the bank. Plaintiff testified that at this conference he was informed that the bank was claiming a mortgage on the cattle he had bought, and it was suggested to him that he buy the bank's mortgage so that he would have a lien for at least part of the money he had put into the cattle. This he refused to do. All this took place on November 20, 1940, the same date as the sale. The next day was Thanksgiving Day, and early the morning of the 22d plaintiff took the cattle to the southern part of the state and sold them at an auction sale. This was done without notice or knowledge of the bank. It is plaintiff's present contention that he believed that Barton's statement and the surrender of possession of the cattle to him by the deputy sheriff constituted a release of the bank's lien, although on the preliminary hearing in justice court he testified: "That there was a possibility I might have to pay some of the mortgage on top of what I paid on the mortgage. [sic] I didn't disregard that in buying those cattle." The inconsistency is apparent.

Plaintiff consulted Austin L. Grimes, the county attorney, who, plaintiff testified, was of the opinion that plaintiff would be responsible only for the difference between the debt secured and the amount obtained on foreclosure of the exempt property still held by Clarence Taylor, the original debtor. Mr. Grimes testified that he told plaintiff that the cattle could only be sold with permission of the bank.

About two weeks after the sale, plaintiff had another meeting with Hartmann at the bank but did not disclose that he had sold the cattle. He then refused to pay the mortgage. Thereafter the bank commenced foreclosure proceedings and, not finding the cattle, on December 27, 1940 had plaintiff arrested for concealing and disposing of mortgaged property. The county attorney conducted the preliminary hearing in justice court, which resulted in the dismissal of the complaint. In the malicious prosecution action based on this complaint the jury found for defendants, and we need not consider it further except as it served to disclose the facts relative to the sale and the contentions of the parties.

The prosecution under consideration was commenced by a complaint signed by the bank on March 26, 1941. The county attorney testified that after the first preliminary hearing before the justice he was of the opinion that there was probable cause and that the "evidence taken at that hearing would conclusively establish in my mind a criminal cause of action for concealing mortgaged property so far as the jurisdiction of Morrison county was concerned." He also testified that if the bank wanted to sign another complaint he would issue it. The county attorney and the bank's attorney, Rosenmeier, conferred several times concerning the second prosecution and, as Rosenmeier was not at the preliminary hearing, the bank ordered a transcript of the testimony in justice court, which Rosenmeier examined before advising the bank. It was upon his advice that the complaint was signed.

1. It is a well established rule in this state that where a person states fully and fairly to an attorney all the facts known to him and is advised that such facts warrant a criminal prosecution, and, acting in good faith in reliance on such advice, he institutes a prosecution he has a complete defense to an action for malicious prosecution. Youmans v. Berkner, 167 Minn. 67, 208 N.W. 530; Jones v. Flaherty, 139 Minn. 97, 165 N.W. 963; Moore v. Northern P. R. Co., 37 Minn. 147, 33 N.W. 334; Dombrovske v. Dombrovske, 137 Minn. 56, 162 N.W. 891. This is the general rule in other jurisdictions. See cases collected in annotation in 18 L.R.A.,N.S., 50 note II.

2. Plaintiff does not question the rule but contends that whether or not the bank made a full and fair disclosure to its attorney was a question for the jury. The trial court so submitted it. Plaintiff contends that the bank did not tell Rosenmeier of plaintiff's version of the statement made by Barton at the sale. Rosenmeier was familiar with this transaction from the beginning. On the day of the sale the deputy sheriff in charge of the sale called Rosenmeier to inquire about the purchaser's right to possession of...