Shatz v. American Sur. Co. of N. Y.

• Decision Date: 16 December 1955
• Citation: 295 S.W.2d 809
• Parties: Louis SHATZ, Appellant, v. AMERICAN SURETY COMPANY OF NEW YORK and Nora Catherine Breen, Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 809

295 S.W.2d 809

Louis SHATZ, Appellant, v. AMERICAN SURETY COMPANY OF NEW YORK and Nora Catherine Breen, Appellees.

Court of Appeals of Kentucky.

Dec. 16, 1955.

As Modified on Denial of Rehearing Nov. 30, 1956.

S. Arnold Lynch, Louisville, for appellant.

Bullitt, Dawson & Tarrant, Sam J. Stallings, Louisville, for appellee.

CLAY, Commissioner.

This suit was brought by the plaintiff against defendants Nora Breen and her surety company to recover $30,000 alleged to have been misappropriated by her while employed as plaintiff's bookkeeper. After a lengthy trial the jury returned a verdict for defendants. Plaintiff asks that the judgment be reversed on a number of grounds.

Since 1940 Mrs. Breen had been employed as a bookkeeper by the plaintiff. She finally left his employ on October 7, 1949. Shortly after termination of the employment an audit of plaintiff's books showed a substantial shortage of currency traceable to the difference between the gross receipts and the bank deposits shown by the books. It is plaintiff's claim that the withdrawals of cash were made by Mrs. Breen over a long period of time, and involved a great number of items. Her defense was that these withdrawals were made by the plaintiff (no impropriety suggested), and any discrepancies that might appear in the books are a result of his method of conducting the business.

-1-

This suit was practiced under the Civil Code of Practice and was brought as a common law action. By amended petition plaintiff alleged it would be necessary to have accountants testify with respect to hundreds of names, amounts and dates; that this evidence would present a long series of bookkeeping transactions and a highly technical analysis thereof by experts; and that 'great details of fact and complications of various bookkeeping entries make it impractical for a jury to try this case intelligently'. On the basis of these allegations, supported by an affidavit, plaintiff moved to transfer the case to equity under Section 10(4) of the Civil Code of Practice. This motion was overruled and this ruling is the first ground urged for reversal.

This was not a suit on account, nor did it involve an accounting between the parties. As we have stated above, the case presented a legal issue as to whether or not Mrs. Breen had wrongfully taken the plaintiff's money. It is true that bookkeeping accounts were involved in the controversy, but the parties were in substantial agreement as to what the regularly kept books showed. Admittedly they did not reflect a true picture of the withdrawals from the business. During the trial plaintiff went into every item in the books in fine detail, and eventually so complicated matters that anyone would have difficulty in understanding all the technical aspects of the case.

However, the basis for trying a suit in equity is that it is one of an equitable nature wherein the remedy at law (trial by jury) is inadequate and will not afford justice. O'Connor v. Henderson Bridge Co., 95 Ky. 633, 27 S.W. 251, 983. The fact that a great mass of evidence or a great number of witnesses is necessary to prove a legal issue does not necessarily convert the suit into one of an equitable nature. See Asher v. Golden, 232 Ky. 1, 22 S.W.2d 411; Lane v. Rowland, 295 Ky. 868, 175 S.W.2d 1000.

Under the Civil Code it has been held that the right to transfer a suit to equity is determinable exclusively on the pleadings. Wilhoit v. Cundiff, 291 Ky. 99, 163 S.W.2d 280. While plaintiff's pleading stated that his proof would require extensive explanations of accounts, neither those pleadings (nor the proof on the trial) changed this suit to one of an equitable nature within the meaning of Section 10(4) of the Civil Code of Practice. We believe whatever complications were raised by the pleadings and the proof were not inherent in plaintiff's cause of action, but were created by the method he adopted in proving his case. We conclude that the court did not err in refusing to transfer this case to the equity side of the docket.

-2-

Plaintiff devotes a substantial portion of his brief to the proposition that the verdict is palpably against the weight of the evidence. At great length he argues that the books show many discrepancies, and that the methods used by Mrs. Breen are those of an embezzler rather than those of a bookkeeper attempting to account for cash withdrawals made by her employer. While this proof was persuasive, it was rebutted. Mrs. Breen denied that she wrongfully took any of the plaintiff's money; she testified that there were other account books which the plaintiff did not produce; and she showed circumstances in support of her defense that the money was withdrawn by the plaintiff. Obviously one of the controlling considerations in this lawsuit was the respective credibility of the plaintiff and Mrs. Breen. The question of credibility is preeminently one for the jury.

Under this same general head (weight of the evidence) plaintiff sought to have stricken the testimony of Mrs. Breen on the ground that upon cross-examination she was so evasive and vague that her testimony must be disregarded. He points to many instances where Mrs. Breen refused to answer questions or went off on some side issue. From a reading of Mrs. Breen's testimony, it must be admitted that there is some substance in plaintiff's contention. However, we cannot say that she was so evasive and vague that her testimony must be disregarded. This likewise went to her credibility, which the jury had a right to pass upon. The trial court properly declined to set aside the verdict on this ground.

-3-

Plaintiff's next contention is that the trial court erroneously admitted evidence of Mrs. Breen's acquittal on a criminal charge of embezzling plaintiff's money for the year 1949. At a pre-trial conference, and subsequently throughout the trial, plaintiff strenuously objected to the introduction of evidence with respect to the acquittal. This evidence was admitted as a 'relative circumstance'.

Prior to the case of Wolff v. Employers Fire Ins. Co., 282 Ky. 824, 140 S.W.2d 640, 130 A.L.R. 682, it was apparently settled in this state that a judgment of acquittal in a criminal prosecution was not competent evidence in a civil suit involving the same facts. Sovereign Camp of Woodmen of the World v. Purdom, 147 Ky. 177, 143 S.W. 1021; Bray-Robinson Clothing Co. v. Higgins, 210 Ky. 432, 276 S.W. 129; Occidental Ins. Co. v. Chasteen, 255 Ky. 710, 75 S.W.2d 363.

The Wolff case, above cited, involved a judgement of conviction. The decision in the case was that such a judgment does not constitute a bar in a civil action, but that it is admissible as circumstantial evidence. In the opinion, language was used to the effect that a judgment of conviction and a judgment of acquittal were in the same category, and that both judgments were admissible in a subsequent civil suit involving the same fact situation.

With respect to the judgment of acquittal, this was the purest dictum, as that question was in no respect involved. It has since been recognized as dictum by the editor of American Law Reports Annotated and the editor of American Jurisprudence. 18 A.L.R.2d 1219; 30 Am.Jur., Judgments, Section 293, page 1005, Note 19 (1955 Supp.). While in the Wolff opinion the case of Liverpool & London & Globe Ins. Co. v. Wright, 166 Ky. 159, 179 S.W. 49 (which involved a conviction judgment) was overruled, the cases above cited relating to judgments of acquittal were not discussed, and no case decided subsequent to the Wolff decision has been found which follows the unnecessary statement in that opinion with respect to a judgment of acquittal. As a matter of fact, in the case of Harlow v. Dick, Ky., 245 S.W.2d 616, which follows the Wolff decision with respect to a judgment of conviction, the reason for the rule given in the opinion would not be applicable to a judgment of acquittal.

The overwhelming weight of authority in other jurisdictions denies the admissibility of a judgment of acquittal as proof in a civil action involving the same facts. 30 Am.Jur., Judgments, Section 291; 50 C.J.S., Judgments, § 754(b)(1); Tennessee Odin Ins. Co. v. Dickey, 190 Tenn. 96 228 S.W.2d 73, 18 A.L.R.2d 1287. In Massey v. Taylor, 45 Tenn. 447, 448, 98 Am.Dec. 429, it was specifically held:

'The acquittal of the plaintiff upon an indictment for embezzlement, is not entitled to any effect as evidence in a civil action, as an answer to the defense of embezzlement, or as tending to show, that, in fact, the plaintiff did not commit the embezzlement'.

There are sound reasons why a judgment of acquittal should not be admissible in a civil action of this nature. Perhaps most significant is the fact that in the criminal prosecution the jury must find the defendant guilty beyond a reasonable doubt; whereas, in the civil proceeding the plaintiff may prove his case by a preponderance of the evidence. Thus the verdict of acquittal does not necessarily decide that the defendant did not commit the acts charged, but is a negative finding that the Commonwealth did not sufficiently prove the commission of a crime. In addition, since the plaintiff was not a party to the criminal proceeding, and since he is entitled to have an independent jury pass upon the merits of his claim, the finding of the criminal jury should not be used against him. Finally, in view of the difference in parties, procedures and degree of proof required; and the possibility that the prosecution may have been wholly inadequate; in the final analysis the verdict of acquittal is not such a fact as would constitute evidence of defendant's civil non-liability.

We believe the evidence was incompetent and inadmissible. There can be no doubt that it was highly prejudicial, because it afforded the civil jury, in a close case on the facts, too inviting an opportunity to substitute the finding of the criminall jury for its own independent judgment. See Occidental...