Rivers v. Ex-Cell-O Corp.

• Decision Date: 22 October 1980
• Docket Number: 44579,EX-CELL-O,Docket Nos. 45303
• Citation: 100 Mich.App. 824,300 N.W.2d 420
• Parties: Donald J. RIVERS and Carolyn Lee Rivers, Plaintiffs-Appellees, v.CORPORATION, Defendant-Appellant. Donald J. RIVERS and Carolyn Lee Rivers, Plaintiffs-Appellants, v.CORPORATION, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 420

300 N.W.2d 420

100 Mich.App. 824

Donald J. RIVERS and Carolyn Lee Rivers, Plaintiffs-Appellees, v. EX-CELL-O CORPORATION, Defendant-Appellant.

Donald J. RIVERS and Carolyn Lee Rivers, Plaintiffs-Appellants, v. EX-CELL-O CORPORATION, Defendant-Appellee.

Docket Nos. 45303, 44579.

Court of Appeals of Michigan.

Oct. 22, 1980.

Released for Publication Jan. 29, 1981.

William A. Joselyn, Detroit, for defendant-appellant.

William J. Heaphy, Holland, for plaintiffs-appellees.

Before BASHARA, P. J., and RILEY and QUINNELL, ^* JJ. QUINNELL, Judge.

In December, 1972, defendant's auditor and corporate counsel reported to the Wayne County Prosecutor's Office that plaintiff Donald Rivers, who at that time was defendant's manager of office services, had embezzled some $100,000 worth of postage stamps over a four-year period. Plaintiff was charged and bound over for trial. However, Wayne Circuit Court Judge Charles Kaufman quashed the information for lack of proof that a crime had been committed. Thereafter, plaintiffs filed their complaint alleging malicious prosecution and loss of consortium. Following a trial, plaintiffs, Mr. and Mrs. Rivers, were awarded damages of $450,000 and $50,000 respectively.

Plaintiff Donald Rivers had been manager of office services for defendant since August, 1971. In this capacity, he was responsible for defendant's three mailroom facilities. The company had postage meter machines at each mailroom. Defendant's position was that all but a minimal amount of postage was handled through the machines so that the use of stamps for mailing could not have accounted for the high volume of stamps plaintiff had purchased. Plaintiff, however, contended that he had begun substituting stamps for the meter at one of the facilities in 1969 while he was an assistant to the then manager of office services. He found that the meter in this facility was inadequate because it frequently jammed, employed postage tapes, and was difficult to use for bulky packages.

Defendant's suspicions were first aroused in October, 1972, when a postal employee phoned defendant's traffic manager to leave a message for the man who bought the big rolls of stamps. This was reported to plaintiff's superiors, who were suspicious because of their belief that the company did not use stamps for mailing purposes. Consequently, defendant's auditor authorized an investigation. The investigation disclosed a large number of checks signed by plaintiff with the designation "recharging meter" written on them. However, the dates on these checks did not correlate with the recorded rechargings. A mailroom employee was also given a stack of envelopes and some stamps to ascertain if the stamps could have been used as postage. The mailroom employee applied the stamps by licking them. The investigator concluded from this "test" that plaintiff would have spent nearly all of his time applying stamps if the large amount of stamps were actually used.

Plaintiff was never interviewed during the course of the investigation. During the trial, however, he pointed out that the "test" did not simulate the conditions under which the stamps were actually applied, namely, that he quickly applied large denominations of postage to bulky packages using a wet sponge.

As a result of defendant's investigation, the Wayne County Prosecutor's Organized Crime Task Force became involved in this matter. Defendant also reported a theft loss to its bonding company.

Defendant gave the Task Force a report of its findings. Investigators with the Task Force, working with defendant's employees, conducted a second audit. Plaintiff was interviewed and explained his version of the mail operation, including the fact that the department ran under its postage budget. This was considered insignificant by the investigators and a warrant was issued.

Plaintiff argued that defendant withheld material information which would have dissuaded the Task Force from prosecuting. Plaintiff's case also made much of the relationship between defendant and its bonding company. The accusation was made that defendant's desire to have plaintiff prosecuted was motivated by its own desire to collect on the bond. Defendant's corporate counsel acknowledged his perception that the bonding company would be more likely to honor the claim if the thief were prosecuted and convicted. In July, 1973, after plaintiff had been bound over for trial, defendant and its bonding company entered an agreement in which the $100,000 claim was paid. The settlement was to become final upon plaintiff's conviction. This settlement would also become final if plaintiff were to be acquitted, but no civil action proved his innocence. If a civil action were to exonerate plaintiff, however, defendant would be required to refund the money.

Defendant appeals from the jury's finding of liability. Plaintiffs appeal from the assessment of damages.

I. DID PLAINTIFFS ESTABLISH ALL OF THE ELEMENTS NECESSARY TO SUSTAIN A MALICIOUS PROSECUTION ACTION?

The elements of a cause of action for malicious prosecution are: (1) a criminal prosecution instituted against plaintiff by defendant, terminating in plaintiff's favor, (2) absence of probable cause for the criminal proceeding, and (3) malice or a primary purpose in bringing the action other than bringing the offender to justice. Weiden v. Weiden, 246 Mich. 347, 352, 224 N.W. 345 (1929), Ringo v. Richardson, 88 Mich.App. 684, 689, 278 N.W.2d 717 (1979), lv. den. 407 Mich. 906 (1979).

Defendant first contends that it simply disclosed all material information to the police and prosecutor so that it cannot be held liable for "instituting" the criminal charge. Due to the important state policy of encouraging citizens to report possible criminal violations within their knowledge, a defendant cannot be held liable for malicious prosecution unless he took some active role in instigating the prosecution. If the defendant, as complainant, has made full and fair disclosure of all of the material facts within his knowledge to the prosecutor, and the prosecuting attorney recommends a warrant, no recovery may be had against said defendant, for under such circumstances the complainant has not "instituted" the charge. Renda v. International Union, UAW, 366 Mich. 58, 83-87, 114 N.W.2d 343 (1962). Clanan v. Nushzno, 261 Mich. 423, 428-429, 246 N.W. 168 (1933).

In the case at bar, however, the jury could properly conclude that defendant's agents did not disclose all material facts to the prosecutor. Plaintiff ran under budget in 1972 and close to budget in 1970 and 1971 while allegedly stealing approximately one-third of his postage budget in each of these years. The budgets for the years 1970 through 1972 were in accord with budgets from years in which no thefts occurred. Moreover, adjusting for postal rate increases, postage costs actually decreased from 1970 to 1972. The Task Force discounted the budget compliance as an indication of innocence, based on management representations about the budgeting process. Defendant's agents stated that the plaintiff could have padded the budget to conceal his theft and, also, stated that the budget for any given year was simply based on the previous year's budget. In fact, plaintiff prepared his department's budget only in 1972. Furthermore, all of the budgets from 1970 through 1972 were reviewed by plaintiff's superiors.

The most salient factor supporting the jury's conclusion involves the designation of purpose in the description column of the checks used for stamps. Plaintiff had written on a large number of checks "recharging meter". However, these checks did not correlate with the recorded rechargings. The fact that the checks designated for meter recharging were actually used for the purchase of stamps seemed very incriminating. However, the investigator who conducted the internal audit for the company reported findings critical of the company's accounting procedures in a memo to a corporate vice-president. This memo was not divulged to the Task Force. Moreover, plaintiff offered competent evidence, including the testimony of the corporate treasurer, which showed widespread disregard of the designation of purpose throughout the corporation.

Where a business fails to disclose information which provides exculpatory explanations for the alleged irregularities, and where this information might dissuade the prosecutor from seeking a warrant, a defendant is not entitled to a directed verdict. Under the evidence presented, fair and full disclosure was a question of fact for the jury. Clanan v. Nushzno, supra.

Defendant also contends that plaintiff failed to establish the element of want of probable cause. Want of probable cause is a question of fact for the jury if the facts are in dispute. Taft v. J. L. Hudson Co., 37 Mich.App. 692, 695, 195 N.W.2d 296 (1972), lv. den. 387 Mich. 772 (1972). We find ample evidence in the record supporting a finding of lack of probable cause. Defendant's agents never confronted plaintiff with their concerns and, in fact, failed to pursue numerous leads which might have convinced them of plaintiff's innocence. Knowing full well the corporation's accounting procedures and relying on preconceived notions concerning the amounts of stamps the corporation used, defendant's agents failed to behave in a prudent manner before levying their charges of theft. In quashing the information against plaintiff, the Wayne Circuit Court ruled that there was no evidence from which the basic element of theft an unlawful taking could be reasonably inferred. The inherent unlikeliness that an individual would steal $100,000 worth of stamps, without the slightest hint as to how they could be converted to cash or otherwise improperly used, clearly allows a jury to find a want of a probable cause for bringing the charges on the evidence adduced.

As to the element of malice, it may be inferred from a lack of probable cause. Although the...