Rawson v. Leggett

• Decision Date: 17 April 1906
• Citation: 77 N.E. 662,184 N.Y. 504
• Parties: RAWSON v. LEGGETT et al.
• Court: New York Court of Appeals Court of Appeals

184 N.Y. 504

77 N.E. 662

RAWSON

v.LEGGETT et al.

Court of Appeals of New York.

April 17, 1906.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Byron Rawson against Francis H. Leggett and others. From a judgment of the Appellate Division (90 N. Y. Supp. 5,97 App. Div. 416), affirming a judgment for plaintiff, defendants appeal. Reversed.

Hiscock, Werner, and Chase, JJ., dissenting.

Alton B. Parker and Edward S. Hosmer, for appellants.

Benjamin N. Cardozo, Isaac N. Mills, and Morris J. Hirsch, for respondent.

PER CURIAM.

This action was brought for malicious prosecution. At the instigation of the defendants, as we shall assume upon this appeal, several indictments for grand larceny were found against the plaintiff in the county of New York, which were thereafter dismissed. Thereupon he brought this action and obtained a verdict for $25,000. It is insisted by the appellants that this result was erroneous and that plaintiff as a matter of law failed to establish want of probable cause. A majority of the court concur in this view and think that the judgment should be reversed.

Appellants are and were wholesale grocers in the city of New York, having and carrying upon their books the accounts of many thousand customers. In 1901, and for some time prior thereto, they had in their employ a salesman named Borchardt, who made sales to and collections from a large number of customers. In November of said year it was discovered that during a period of about three years, by manipulation of his customers' accounts and misappropriation of moneys collected from them, he had stolen from his employers about $24,000, and criminal proceedings were instituted against him. It was the intention and custom of defendants to guard against such peculations as this upon the part of salesmen by sending every month to each of their customers a statement of account for comparison and verification, with the request to report any irregularities or discrepancies at the office, and not to the salesmen. In some manner these statements in the case of Borchardt's customers were wholly or largely suppressed and not sent. and thus the prompt discovery of his crime prevented. During the period above mentioned, and for a long time prior thereto, plaintiff was in the employ of defendants as their head credit man, receiving a salary of $4,500 a year, and, amongst other duties, charged with those of looking after the accounts with customers and salesmen dealing with the latter. He assumed supervision over Borchardt's accounts and customers to the express exclusion of everybody except a member of the firm.

There has been no dispute in this litigation about the foregoing facts, which, of course, were known to the defendants at the time they instituted the prosecution against plaintiff. In addition, before instituting criminal proceedings, defendants knew, or personally or through their representatives were informed, of other real or alleged facts which, in connection with those already cited, are now claimed to have constituted a reliable and sufficient foundation for the assumption that plaintiff was guilty of the charges pressed against him. The existence of many of those facts and the correctness of the information relating thereto is not now challenged. After his discovery and arrest, Borchardt made a confession, both to Mr. Leggett and to others engaged in the investigation, implicating plaintiff as a confederate in his crimes and as a partner to the extent of $6,000 or $8,000 in the guilty proceeds thereof. The monthly statements which should have been sent to Borchardt's customers were delivered by the bookkeeper to plaintiff, by whom, after being checked, they should have been delivered to addressing and mailing clerks.

Plaintiff and Borchardt were upon terms of great intimacy, which appeared to increase, rather than decrease, after the former concededly knew of the latter's crimes, and while plaintiff was still in the employ of the defendants. During the few months before Borchardt's apprehension, in the neighborhood of $1,600 were by him paid or passed to the credit of plaintiff. In 1900 plaintiff consented that Borchardt should assume control of a certain account held by the defendants against one Yaeger, and, although the moneys upon said account were collected by Borchardt in said year, no report or entry upon defendants' books was made to disclose these facts, and this account, amounting to several hundred dollars, made up part of the embezzlement. Subsequently, in proceedings threatened against Borchardt for perjury in claiming that he was the owner of defendants' account, plaintiff, when making an affidavit for his assistance, secured back from him, or his attorney,a slip of paper which he had written, indicating his willingness to hold back Borchardt's slips (made in the discharge of his duty as salesman relating to his accounts) for a short period, because of his lack of funds. In the midst of the investigation of Borchardt's crimes, plaintiff, without having, so far as appears, any other lucrative engagement, resigned his position and salary of $4,500 with defendants, and shortly thereafter left their employ.

The district attorney was made acquainted with the foregoing facts and information, defendants occupied a considerable length of time in investigating the subject, and, with the exception of one set of facts hereafter specially to be referred to, as to which the parties are in conflict, we think fairly and fully placed before the district attorney the knowledge and information possessed or acquired by them. In addition, the latter official, through one of his assistants, caused an extended examination to be made of many of the people who had knowledge of the facts or had supplied the information, and after this had been done he advised the submission of charges against Rawson to the grand jury, with the resulting indictments heretofore mentioned. Defendants expressly deny any malice towards plaintiff, and assert their reliance upon the advice of counsel, and especially of the district attorney, in instituting the criminal prosecution which they undertook. We think that upon all of the foregoing facts and others appearing in the record, to which we have not made specific reference, it must be held as a matter of law that defendants had probable cause to believe that Rawson was guilty of aiding Borchardt in the larcencies which were concededly committed, and were not guilty of any malicious prosecution. Plaintiff especially challenges such conclusion and the propriety and legality of defendants' conduct in three respects and insists that such case was made out for the consideration of the jury that the judgment should stand.

In the first place he urges that it was a question of fact whether Borchardt ever made any confession implicating him, and that, even if he did, it was still for the jury to say whether such confession was entitled to any credence as a basis for what was subsequently done. We cannot agree with this contention in either of its branches. The proof that the confession was made does not rest upon the evidence alone of Mr. Leggett, but is sustained by other evidence so ample and trustworthy that the jury would have had no right to disregard it. So, too, while this confession might be the subject of suspicion, as dictated by Borchardt's personal interests, and would be insufficient of itself to furnish a basis for the prosecution of plaintiff, we think that it was so supported and corroborated by other facts appearing to exist at the time the indictments were found that defendants were entitled to rely upon it as furnishing in part a probable cause for complaint. Molloy v. L. I. R. R. Co., 59 Hun, 424, 13 N. Y. Supp. 382;Blunk v. A., T. & S. F. Ry. Co. (C. C.) 38 Fed. 311.

In the second place, it is urged that, taking into account plaintiff's long service with them and prior good character, defendants should have communicated with him before making any complaint, and that if they had done so they would have learned that various transactions, upon the appearance of which they acted, were innocent, as now claimed by plaintiff. For instance, he not only denies his guilt generally, but he testifies that the moneys paid to him by Borchardt during the few months preceding the former's apprehension were loans, and not proceeds of larceny; that the transaction of the Yaeger account was an innocent one, undertaken for the purpose of collecting a debt due to the defendants; that his intimacy with Borchardt and his frequent visits to him after the discovery of his wrongdoing were in connection with the moneys loaned as above stated. We are not prepared to assent to the proposition that a person having cause to believe that another has committed a crime must, under all circumstances, go to the latter, acquaint him with his suspicion, and ask for his explanation of apparently unfavorable circumstances, or accept the risk of being found guilty of malicious prosecution if he does not do so. There undoubtedly may be many cases where reasonable prudence would suggest such a course, and where the failure so to do might furnish, in part at least, the basis for holding the prosecutor guilty of unreasonable conduct. We do not think, however, that this is one of those cases. The defendants made their investigation with much patience and care, and it was not incumbent upon them, under all of the circumstances, to warn plaintiff of their suspicions and afford him the opportunity, if he so desired, to escape from the reach of any just prosecution. Kutner v. Fargo, 34 App. Div. 317, 322,54 N. Y. Supp. 332.

Lastly, the plaintiff urges certain facts, reference to which has been purposely reserved until this point, which must be assumed to have been within defendants' knowledge at the time plaintiff was indicted, and which it is claimed so strongly tended to establish the latter's innocence of the...