Montgomery Ward & Co. v. Pherson

• Decision Date: 14 June 1954
• Docket Number: No. 17182,17182
• Parties: MONTGOMERY WARD & CO., Inc., et al. v. PHERSON.
• Court: Colorado Supreme Court

Page 643

272 P.2d 643

129 Colo. 502

MONTGOMERY WARD & CO., Inc., et al. v. PHERSON.

No. 17182.

Supreme Court of Colorado, En Banc.

June 14, 1954.

Rehearing Denied Aug. 3, 1954.

Hughes & Dorsey, Thomas Keely and Allan R. Phipps, Denver, for plaintiffs in error.

Rinn & Connell, Boulder, for defendant in error.

KNAUSS, Justice.

The parties will be designated here as in the trial court or by name. Below plaintiffs in error were defendants and defendant in error was plaintiff. Mrs. Josephine Joan Pherson, the plaintiff, had judgment against defendants based on a jury verdict awarding actual and exemplary damages in an action for malicious prosecution. Defendants bring the cause here by writ of error.

Defendants' answer denied malice, and lack of probable cause in instituting the criminal action, and set up as a further defense alleging that defendants acted upon the advice of competent counsel, to wit, the district attorney to whom they made a full and fair disclosure of all facts in connection with the case.

The evidence shows the following: Montgomery Ward and Co., Inc., is an Illinois corporation doing business in Colorado and operating a retail store in Boulder, Colorado. Plaintiff, Mrs. Pherson, was employed by Montgomery Ward & Co. as a bookkeeper and clerk on or about July 20, 1950. As such she had charge of certain accounts between her employer and customers of the store, which accounts were those listed alphabetically from 'A' to 'K'. She worked on a balcony in the Boulder store, together with several other persons. Customers indebted to the store made payments to either plaintiff or to some other person likewise employed by the Montgomery Ward Boulder store. Plaintiff was responsible for the keeping of the A-K ledger of the store's credit customers. Late in November, 1950 a Mrs. McMurtry, office manager of the Boulder store, in making a periodic check of ledger accounts developed an apparent shortage in the records and accounts kept by Mr. Pherson. Upon this discovery, Mrs. McMurtry called the store manager, defendant Williams, and he entered into the investigation and incident conversations with plaintiff. Shortly thereafter plaintiff voluntarily left the employ of Montgomery Ward. Mr. Williams called the Chicago office of Montgomery Ward, reported the alleged irregularities and requested an aduit of the store's books. Thereupon Mr. Winick, an accountant, came out to conduct the requested audit. He contacted various persons indebted to his company and learned that some customers had made payments to plaintiff and had receipts therefor, but that the payments made by them were not reflected on the ledger accounts of such customers, or if so accounted for, the cash was missing. When confronted with these alleged facts, plaintiff denied any responsibility for the discrepancies. Some receipts for payments so made and not reflected on the ledger admittedly were signed by plaintiff. Mr. Winick testified that plaintiff offered to make up the alleged shortage and that on behalf of the company he declined to accept it. Mrs. Pherson denied that she made any such offer. The written and documentary evidence adduced upon the trial was submitted to the district attorney, who, after hearing the facts presented by Winick and Williams, sent for Mrs. Pherson and heard her denials and her side of the story. Thereupon the district attorney commenced the embezzlement action against Mrs. Pherson. Williams, the store manager, verified the criminal information. When the embezzlement charge was tried, it resulted in a not guilty verdict. Thereafter Mrs. Pherson instituted the instant malicious prosecution action to recover $41,000 actual and $10,000 exemplary damages, joining her employer and Williams, the store manager, as defendants.

In addition to her own testimony, plaintiff offered the evidence of six witnesses. Two of these testified in rebuttal. Plaintiff's testimony went to the matter of her employment, the fact that shortages were claimed by the offic manager; that she was interviewed and denied any responsibility for the alleged discrepancies in the books of Montgomery Ward; that she was acquitted in the criminal proceeding and had incurred indebtedness for counsel fees in that proceeding; she testified that the local newspaper reported in its issue of December 13, 1950 that she was charged with embezzlement; that she felt a sense of humiliation and was nervous as a result of the criminal proceeding; she claimed the proceeding prevented her from obtaining other employment. The newspaper article was not offered in evidence. Another witness testified regarding the physical layout where plaintiff worked and the fact that cash drawers were not locked. Three other witnesses testified to the good reputation of plaintiff. Thereupon plaintiff rested her case. Motion for a directed verdict in favor of defendants was then made and ruling thereon reserved 'until the defendants' case is in.'

Defendants offered the evidence of nine witnesses including the testimony of Mr. Williams, the store manager, and that of Mr. Winick, the auditor, that of the deputy district attorney who advised the filing of the criminal information, as well as the testimony of other employees and some patrons of the store who produced receipts or credit memoranda showing that they had made payments on their accounts which had not been credited on the Montgomery Ward books.

After all the evidence had been introduced, defendants renewed their motion for a directed verdict, and ruling was again reserved until after the verdicts were returned. The motion was overruled at the time judgment was entered.

In order that plaintiff's case go to the jury for determination, it was necessary for her to prove by a preponderance of the evidence that the defendants were parties to or assisted in the criminal case resulted to or assisted in the criminal proceeding against her; that the criminal case resulted commencement of the instant action; that there was no probable cause for the criminal prosecution; that the defendants were actuated by malice in the criminal proceeding; and, that the plaintiff was damaged by reason of the criminal prosecution.

In our consideration of this case we shall refer to three of the points urged for reversal of the judgment: (1) Was there a want of probable cause for the criminal prosecution? (2) Were defendants actuated by malice? (3) Was the criminal prosecution instituted in good faith and in reliance upon the advice given by the prosecuting authority after a full and fair statement of all the facts?

The existence of probable cause is alone sufficient to relieve a defendant of a charge of malicious prosecution. 34 Am.Jur., p. 731, § 46; Flader v. Smith, 116 Colo. 322, 181 P.2d 464, 172 A.L.R. 1335. 'The usual standards of human judgment and conduct determine what is and what is not probable cause.' Lounder v. Jacobs, 119 Colo. 511, 205 P.2d 236, 239.

Whether a given state of facts or circumstances amounts to probable cause for the prosecution, or the contrary, is a question of law for the court. * * * But where the conceded or substantially undisputed facts and circumstances under which the prosecution was carried on do not show a want of probable cause for the prosecution, the court should take the responsibility of granting a nonsuit or of directing a verdict in favor of the defendant.' Gurley v. Tomkins, 17 Colo. 437, 30 P. 344, 345.

An innocent person may be prosecuted unjustly, and subjected to the expense and disgrace incident thereto with no right to call the prosecutor to account, provided he acted upon an honest and reasonable belief in commencing the proceeding complained of. One may act on what appears to be true, even if it turns out to be false, provided he believes it to be true and the appearances are sufficient to justify the belief as reasonable.

It is for the best interests of society that those who offend against the laws of the state shall be promptly punished, and that any citizen who has reasonable grounds to believe that the law has been violated shall have the right to cause the arrest of the person whom he honestly and in good faith believes to be the offender. For the purpose of protecting him in so doing, it is the generally established rule that if he has reasonable grounds for his belief, and acts thereon in good faith in causing the arrest, he shall not be subjected to damages merely because the accused is not convicted. The rule is founded on the grounds of public policy in order to encourage the exposure of crime.

If the facts and circumstances show that, in the prosecution, the party was actuated by an honest and reasonable conviction of the justice of his suit and not merely with a view to occasion expense and trouble to the adversary, the action will not lie.

In order to constitute probable cause it is necessary that there be a belief held in good faith by the prosecutor in the guilt of the accused, and that such belief be reasonable and prudent. Glenn v. Lawrence, 204 Ill.App. 411, affirmed 280 Ill. 581, 117 N.E. 757.

The defendant in a suit based on malicious prosecution may have probable cause for the filing of the charges even though subsequent events may prove such charges to be erroneous. The existence of probable cause is alone sufficient to relieve a defendant of a charge of malicious prosecution. Both malice and want of probable cause must be proved to justify a recovery. Restatement of Law-Torts, c. 29, § 672. Lounder v. Jacobs, supra.

The record discloses a total lack of evidence indicating that either of the plaintiffs in error were actuated by malice.

Malice is any motive other than a desire to bring an offender...