DAVIDSON v. MONTGOMERY

WOLFE, Commissioner.

This action was brought for $100,000 actual and $100,000 punitive damages arising out of an alleged malicious prosecution of plaintiff. Upon trial a verdict was returned for the plaintiff in the sum of $2,500 actual and $10,000 punitive damages. A remittitur of $6,250 was made by the plaintiff at the direction of the court and a judgment entered in the sum of $6,250. It is from this judgment that the defendants prosecute their appeal.

Davidson, the plaintiff, was a refrigeration engineer employed by the Hussmann Company of St. Louis and his work entailed the development and installation of commercial refrigerating units. Some of his work had to do with the appointment of distributors for his company's products. During the war years about ninety per cent of the company's business was the manufacture of various types of refrigerators for the Army and Navy. With the close of the war the Hussmann Company again went into full production of commercial equipment, but there existed a great scarcity of material and a demand for refrigerating units that could not be filled. Davidson testified that because of this he attempted to put their distributors in touch with any one that had marketable equipment of the kind the distributors desired.

In 1946 the Government started releasing war surplus stock and part of it was some of the units that were so much in demand. In late winter or early in the spring of that year Davidson met a man named Frank H. Black who was doing business as McBee Air Conditioning and Heating Company, with a partner named McQuerrey. Davidson, in testifying about Black, stated that he seemed to have some inside connections in Washington and had advanced information on what was to be released as surplus. Continuing, Davidson testified: "It looked to me like he probably had something on the ball and maybe he could get something for us. I wanted to stay close to him and learn all I could from him." Davidson had Black's company made a distributor for the Hussmann Company and was in frequent communication with him.

Black paid Davidson $500 at one time for his engineering advice although it was part of Davidson's job to give such advice to the Hussmann Company distributors. According to Davidson the sum was paid to him without request and he had never billed Black or the McBee Company for any sum. Davidson stated that he was doing more consultation with Black than was usually required and that Black told him that he would feel freer to consult him if his services were paid for.

Defendant Pennington had worked for the Hussmann Company prior to the war under Davidson. After his employment there he became a distributor for the company in Springfield, Illinois. This was in 1938, but he kept his business during the war years on rather an inactive status and was himself engaged in another occupation. After the war he actively resumed his work as a distributor for the Hussmann Company and came to see Davidson about getting some refrigerating units called walk-in coolers. He was directed to Black of the McBee Company by Davidson and Black told him that he could sell him eleven machines and requested cash in advance. Finally Pennington agreed to pay for seven machines in advance and gave Black a check for $6,500 on June 24, 1946, for coolers which were to be delivered to him in two or three weeks. The coolers were not delivered and Pennington told Davidson about this early in July.

Defendant Montgomery was interested in war surplus refrigerating units and called at the Hussmann Company to get some information about such equipment in June of 1946. He was directed to Mr. Davidson and Davidson told him of the kind of equipment that was on the market as war surplus. They talked to each other on many occasions after that. Montgomery desired to purchase some units known to the trade as W-500 and was directed to Black by Davidson on July 18. Montgomery gave Black a check for $28,425 for twenty-five of the W-500s which were to be delivered in from ten days to three weeks. These were not delivered and have never been and neither have any of the units for which Pennington paid been delivered to him.

Pennington and Montgomery made numerous inquires of Black and Davidson in an effort to secure the merchandise that they had paid for and they finally consulted counsel. In November of 1946 Pennington and Montgomery filed an involuntary petition in bankruptcy against Black and McQuerrey. The trustee of the bankrupt company testified that the company's books were poorly kept but that there was an entry of the $6,500 paid by Pennington and the $28,425 paid by Montgomery under the heading "Money loaned to us". The books also showed payment of $500 to Davidson on June 20, 1946.

In May of 1947 Montgomery and Pennington brought a civil suit against Black, McQuerrey and Davidson, charging the three defendants in that suit with defrauding them of the amounts mentioned.

In December of 1947 Pennington and Montgomery appeared before a grand jury in the City of St. Louis. The grand jury returned an indictment which contained the following charge:

"That Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey on the 22nd day of July, one thousand nine hundred and forty-six, at the City of St. Louis aforesaid, unlawfully, knowingly, fraudulently, designedly and with the felonious intent to cheat and defraud one Joel A. Montgomery, did falsely, fraudulently and feloniously pretend, represent and state to the said Joel A. Montgomery that they, the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey were then and there the owners of certain refrigeration equipment, to-wit: 25-W-500 twin 7-1/2 horsepower refrigeration units manufactured by the Universal Cooler Corporation of Marion, Ohio, then located in a warehouse situated in the City of Baton Rouge, Louisiana; and that they, the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey then and there were the sole owners of the said property, and had legal right and title thereto and they, the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey had authority to sell and convey title to said property to the said Joel A. Montgomery; and the said Joel A. Montgomery believing the said false pretenses, representations and statements so made by the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey as aforesaid to be true, and relying thereupon and being deceived thereby, was then and there induced by said false pretenses, representations and statements so feloniously, designedly, knowingly and fraudulently made by the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey as aforesaid, to pay over and deliver and then and there did pay over and deliver unto the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey, twenty-eight thousand four hundred and twenty-five dollars, lawful money of the United States of the value of twenty-eight thousand four hundred and twenty-five dollars in payment of the purchase price of the above described property, and that the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey the said twenty-eight thousand four hundred and twenty-five dollars of the property of the said Joel A. Montgomery, by means of said false pretenses, representations and statements so falsely, knowingly, designedly and feloniously made as aforesaid, they, the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey then and there unlawfully, fraudulently, knowingly, designedly and feloniously did obtain of and from the said Joel A. Montgomery, with the felonious intent then and there, him the said Joel A. Montgomery to cheat and defraud of the said twenty-eight thousand four hundred and twenty-five dollars.

"Whereas, in truth and in fact, the said Bernard R. Davidson, Frank H. Black, and Hewitt P. McQuerrey on the 22nd day of July, 1946 were not the sole owners of said personal property described aforesaid, and the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey did not have authority to sell said property and could not convey title to said property to the said Joel A. Montgomery, all of which said facts the said Bernard R. Davidson, Frank H. Black and Hewitt P. McQuerrey then and there well knew; against the peace and dignity of the State."

Davidson was arrested and upon trial acquitted.

The facts as stated above are the uncontradicted chain of events which led up to the indictment complained of. There is some variance between the plaintiff's version of his role in introducing the defendants to Black and the defendants' version of it. Plaintiff said that he told defendant Pennington about Black and called Black up while Pennington was in his office. He stated that his conversation was as follows: "I said, `Red,' something to this effect, `Do you still have those coolers, or are you still thinking about them? There is a man in my office, one of our distributors, who seems to be interested. If you are going to be in your office for a while, I will tell him where you are. Maybe you two can get together.'"

About the same type of introduction took place in regard to Montgomery according to plaintiff. However, Montgomery said that the plaintiff assured him that Black was a responsible person to deal with and that the McBee Company was showing a good profit. Montgomery testified that Davidson said that in his personal opinion it would be all right for Montgomery to pay cash to Black.

Black himself left town after Montgomery and Pennington paid him the money and traveled extensively around the country. He kept in touch with Davidson by long distance phone calls. According to Pennington, Davidson told him that he had been in touch with Black and the coolers would be shipped to him from Atlanta and New Orleans. Black was called as a witness by Montgomery but he declined to testify on the ground that he might incriminate himself.

There was considerable evidence about Pennington's and Montgomery's efforts to get their money back.

There was also evidence that the plaintiff enjoyed a good reputation prior to the indictment and that both his reputation and his credit were injured by the indictment and the attendant publicity that it received. However, no point involving the damages is presented by this appeal.

The defendants here urge that the trial court erred in refusing, upon their motion, to direct a verdict in their favor.

One essential element in a plaintiff's case, where he brings an action for damages arising out of malicious prosecution, is that there was a lack of probable cause for the proceedings brought against him. Kvasnicka v. Montgomery Ward Co., 350 Mo. 360, 166 S.W.2d 503; Higgins v. Knickmeyer-Fleer Realty Investment Co., 335 Mo. 1010, 74 S.W.2d 805; Knost v. Terminal R. Ass'n of St. Louis, Mo.App., 222 S.W.2d 593; LaChance v. National Pigments Chemical Co., Mo.App., 104 S.W.2d 693. Where, as in this case, the plaintiff pleads and proves an indictment by a grand jury, a prima facie case of probable cause for his prosecution is established. This presumption raised by the indictment may be overcome by proof to the effect that the indictment was based upon false testimony. As stated in Kvasnicka v. Montgomery Ward Co., 350 Mo. 360, 166 S.W.2d 503, loc. cit. 515: "Respondent here must upset the fact of the indictment by showing that it was obtained by false testimony, known to be false or was obtained by testimony which was recklessly made without reasonable grounds when it could have been ascertained to be false."

Examining the evidence in the light most favorable to the plaintiff we find that he occupied a position with a firm of unquestionably high rank in its field. He was engaged, at a time when all the outlets of that firm needed its products, in directing those seeking supplies to existing sources. He had met, as he stated, a man named Black who seemed to have "inside connections in Washington" and he "wanted to stay close to him". Black had given Davidson $500 for services that his own firm paid him to render gratis and this was given to him without any request on his part for compensation. Four days later Black had taken $6,500 from Pennington who had been directed to Black by the plaintiff; and a month later Montgomery, who had also been directed to Black by Davidson, was defrauded of $28,425. These are the bare facts of the matter as revealed by the plaintiff's own evidence.

The defendants here were defrauded and the pattern that Black employed in the perpetration of the fraud is not an uncommon one. A person of reputation with proper connections introduces the victim to the rogue who takes the victim's money. It therefore appears that if the defendants in this case told the grand jury plaintiff's own version of the transactions, there was probable cause for the indictment. Nor does the fact that Davidson was acquitted of the charge establish any lack of probable cause, for as we said in Knost v. Terminal Railroad Ass'n of St. Louis, Mo. App., 222 S.W.2d 593, loc. cit. 597: "In the criminal case the law required that defendant's guilt be established beyond a reasonable doubt, whereas in this case the law required that defendant have probable cause to believe the plaintiff guilty. His innocence of the charge was not the issue involved, the real question involved being whether the prosecutor had reasonable cause for believing him guilty."

It will be noted that the indictment deals only with the Montgomery charge and the case was tried and submitted to the jury on the theory that Montgomery had falsely testified before the grand jury that he paid $28,425 to Davidson. It is the contention of the plaintiff and was throughout the trial that since the indictment charged Davidson, Black and McQuerrey with having fraudulently taken money from Montgomery then it could be inferred that Montgomery and Pennington had falsely told the grand jury that Montgomery gave the money to Davidson.

Such a view of the meaning of the indictment does not take into consideration the fact that it is a formal charge. Although its language makes no distinction between Davidson and the principals in the fraudulent scheme it does not as a matter of law charge that Davidson himself received any money from Montgomery. The reason for this is that our statutes, Section 4839, R.S.Mo. 1939, Mo.R.S.A. § 4839, provide that an accessory to a felony "may be charged, tried, convicted and punished in the same manner, as the principal in the first degree." Looking therefore at the indictment in its legal import, as we must for it is a formal charge, it charges all parties mentioned in it either as principals or accessories to the fraud and does not by its wording indicate that all three or any particular one received Montgomery's money. State v. Eddy, Mo.Sup., 199 S.W. 186; State v. Wood, Mo.Sup., 285 S.W. 737; State v. Roderman, 297 Mo. 143, 248 S.W. 964.

As stated in Bonzo v. Kroger Grocery Baking Co., 344 Mo. 127, 125 S.W.2d 75, loc. cit. 79: "Actions from malicious prosecution are not favorites of the law. * * * Among the reasons assigned therefor is a sound public policy under which the public's interest in peace and good order exact of an individual citizen for the benefit of the public at large certain requirements that citizens be not deterred by a fear of unpredictable consequences from a bona fide resort to the duly constituted authorities and tribunals for the vindication of the interests of society in matters of public justice."

There was no evidence either direct or by inference that the defendants testified before the grand jury that money was paid to the plaintiff. Plaintiff predicated his cause on the theory that the defendants had so falsely testified, but he failed in his proof, and the court should have directed a verdict in favor of the defendants.

After the verdict below had been returned and judgment entered on the verdict, but before the defendants had filed their motions for a new trial, the court issued an execution at the plaintiff's request. A motion to quash the execution on the ground that it was prematurely issued was filed by the defendants. This motion was overruled and an appeal taken from the order. Since it is apparent that the judgment upon which the execution issued must be reversed and because of that the execution must be quashed, no purpose would be served in passing upon the point raised by the motion.

It is therefore the recommendation of the Commissioner that the execution be quashed and that the judgment be reversed.