Williams v. Southern Bank of Norfolk

Decision Date11 June 1962
Docket NumberNo. 5396,5396
Citation203 Va. 657,125 S.E.2d 803
CourtVirginia Supreme Court

Wayne Lustig (Gordon E. Campbell, on brief), for the appellant.

Robert R. MacMillan (Breeden, Howard & MacMillan, on brief), for the appellee.


SPRATLEY, J., delivered the opinion of the court.

The Southern Bank of Norfolk, hereinafter referred to as Bank, instituted this proceeding on November 2, 1960, by filing a petition for a declaratory judgment and injunction against H. Lee Williams, hereinafter referred to as appellant. The petition alleged that appellant, an officer and principal stockholder of Lee Motors, Inc., and Lee Motors, Inc. were former customers and depositors of Bank, and from time to time had Bank finance motor vehicles bought or sold by appellant and his corporation; that during that relationship certain events occurred and Bank was advised by its attorney at law that there was probable cause to believe that 'a crime' had been committed by appellant; that the facts were made known by its attorney to the Commonwealth's Attorney of the city of Norfolk; and that in June, 1960, appellant was indicted by the grand jury of the city of Norfolk on eleven separate charges of larceny related directly or indirectly to the financing of motor vehicles with Bank.

The petition further alleged that on September 13, 1960, two of the said indictments were tried in the Corporation Court of the city of Norfolk and resulted in the acquittal of the appellant in each case; that on October 21, 1960, the Commonwealth's Attorney of the city of Norfolk moved the trial court to 'nol pros' the remaining nine indictments against appellant and the motion was granted; that subsequently appellant, by his attorney, threatened to institute 'as many as eleven actions' against Bank for malicious prosecution, seeking damages, actual or punitive, in large sums of money, unless Bank paid appellant large sums of money to release his claims.

The petition further set out that each of the threatened actions against Bank arose out of the independent decision of the Commonwealth's Attorney of the city of Norfolk to prepare and present to the grand jury the said eleven indictments, and the independent action of the grand jury in finding a true bill in each instance; that Bank would suffer irreparable injury if appellant should be 'permitted to maintain multiple, harassing actions at law against it alleging malicious prosecution and predicated upon the action of the Commonwealth's Attorney and the grand jury;' and that an 'actual controversy existed between the parties; namely, whether or not Bank can be held civilly liable for the alleged malicious prosecution of' appellant.

Bank prayed that, 'pending the determination of this issue in the cause, a preliminary injunction issue' enjoining appellant, his agents and attorneys, from instituting, maintaining, or prosecuting any action or actions, or suit or suits, against Bank alleging malicious prosecution by it on account of the finding of any of the said indictments, and that, after a hearing of the controversy that a permanent injunction issue.

Upon the filing of the petition, a temporary restraining order was granted. Thereafter, on November 4, 1960, appellant filed his answer denying: (1) That the indictments grew solely out of the independent action of the Commonwealth's Attorney or of the grand jury; (2) That appellant's attorney had 'threatened' to institute legal proceedings against Bank; (3) That Bank would suffer irreparable injury, if appellant were permitted to maintain the actions at law for malicious prosecution; and, (4) That an actual controversy existed between the parties. The answer asserted that Bank was not remediless, save in a court of equity, and prayed that its petition be dismissed.

Appellant also filed a motion on November 11, 1960, to dissolve the temporary injunction upon the grounds that it was improvidently awarded, since Bank had a full, complete and adequate remedy at law; that the petition did not show a denial of such remedy, nor good cause for relief; and that the injunction was in violation of § 8-583 of the Code of Virginia, 1950.

On February 27, 1961, the cause came on to be heard on the petition of Bank, the answer of appellant, and the evidence heard ore tenus. Neither party requested a jury. The chancellor being of opinion that the evidence showed that Bank had made a full disclosure to its counsel of all material facts within its knowledge bearing on the guilt of appellant, decreed that the temporary injunction be made permanent.

Appellant, at all stages of the proceeding, objected to the court's assuming jurisdiction of the cause. He waived none of his rights as to the procedure, and relied upon the grounds set out both in his answer and motion to dissolve the temporary injunction. In addition, he now contends that the chancellor also erred in determining on conflicting evidence that Bank had made a full disclosure of all material facts to the Commonwealth's Attorney, thereby depriving the appellant of his right to a jury trial upon an issue of fact.

On the other hand, Bank contends that threatened with eleven separate actions for malicious prosecution, alleged by it as arising from indictments procured by independent acts of the Commonwealth's Attorney and the grand jury, it was entitled to have a complete remedy from the threatened harassment incident thereto decreed in one declaratory judgment proceeding, rather than to be required to establish its remedy in eleven tort actions.

In view of our conclusion, the evidence will be summarized and stated briefly in general terms:

Appellant was an automobile dealer. He obtained funds from Bank for the purchase and sale of automobiles under what is termed 'floor plan loans.' A 'floor plan loan' is described as a system whereby the dealer obtains money for the purchase of an automobile, placed in his showroom or on his sales lot, by giving the lender a note, a deed of trust on the vehicle securing the note, and a certificate of title to the vehicle with the lien endorsed thereon, agreeing that when the vehicle is sold by the dealer, the proceeds of the sale would be used to pay off the note, the deed of trust, and the lien. Officials of Bank testified that the loan from Bank was to be paid to it immediately upon the sale of a vehicle to a third party. When vehicles were sold under conditional sales contracts, appellant was allowed to discount the contract with Bank and use the proceeds to satisfy the lien held by Bank against each vehicle, a small portion of such proceeds, incidental to the finance charge for the transaction with the conditional sales purchaser, being set aside to the dealer as a reserve to protect Bank in the event the vehicle was repossessed, or the purchaser failed to make full payment therefor.

On behalf of appellant, there was testimony that Bank, with full knowledge, acquiescence and approval, permitted appellant to sell encumbered vehicles and pay off the liens against them to Bank days or weeks after he had received payment from the purchaser of the vehicle, or had discounted purchaser's contract; and that Bank failed to inform either its attorney or the Commonwealth's Attorney of their pattern of practice.

Officers of Bank testified that, in making a spot check on April 9, 1960, upon appellant's automobile inventory, they discovered eight cars, subject to liens of Bank, had been sold and delivered to customers of appellant without payment by appellant of Bank's liens thereon, in violation of § 18.1-116, Code of Virginia, 1950. Unable to settle their differences by negotiations, Bank communicated the above information to its attorney at law, Savory E. Amato, and authorized him to lay the matter before the Commonwealth's Attorney. The Commonwealth's Attorney, after conferring with officers of Bank and its attorney, and making a further investigation, drafted and presented eleven indictments of appellant to the grand jury, and a true bill was returned in each case.

Appellant questioned the sufficiency of the evidence to show that Bank made a full, correct and honest statement of all the material facts within its knowledge, either to its attorney or the Commonwealth's Attorney. In particular, he claims that Bank failed to inform its counsel and the Commonwealth's Attorney that it was the custom and practice of Bank to allow him to make delayed payment of ...

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