Metropolitan Life Ins. v. Miller

Opinion op the court by JUDGE HOBSON — Reversing. Appellee, Miller, was agent for appellant Metropolitan Life Insurance Company, and appellant the National Surety Company was surety on his bond. It was the duty" of Miller to pay over to the company weekly all the money he collected, and his commissions were paid back to him [758] by the company, from tine home office a few days later. The mode of- doing the business was to collect the premiums from the policyholder weekly. The policyholder had a book, and in this his weekly payments were entered by the agent when made. The agent had a similar book, in which the payments were also entered, and he settled weekly with the superintendent by his book. Once in three months the agent’s book was compared with the policyholders’ books, to see if he had accounted to the company on his book for all the money that he had collected, as shown by the policyholders’s books. Miller left the service of the company in December, 1899. The superintendent then went around with Miller, comparing his book with the policyholders’ books, and found that Miller had not entered on his book some collections he had made, amounting to $9.3é, and Miller executed to the company his due bill for the amount. Subsequent investigation showed thai he was behind in a larger amount, and, while he says that he did not agree as to the correctness of the settlement, the weight of the evidence is the other way. Still he paid nothing, and on January 25, 1900, his surety in his bond, the National Surety Company wrote him a letter, telling him that it had paid the insurance company $15.58 for a shortage in his account, and calling on him to reimburse it. To this letter he made no reply. On February 20th the surety company again wrote him in regard to the shortage it had paid, and to this letter he made no reply. The agents of the insurance company had some interviews with him near this time about settling the remainder of the shortage, but nothing came of it. Things ran along for some months, and then, at the request of the surety company, the insurance company directed its agent to institute a criminal proceeding against Miller for [759] embezzlement. A consultation was held with an attorney, and on his advice a warrant was issued on July 14, 1900. Miller was arrested under the warrant, remaining in custody about an hour before he gave bond. This was on Saturday. The case was called on Monday morning, and laid over until Thursday; one of the witnesses having left 1he State. On Thursday morning, before, the county attorney reached the court house, the case was called again; and there being no witnesses present, and no one, to prosecute, the case was dismissed. Miller then filed this suit to recover damages of the two corporations, and their agents taking the proceeding against him, on the ground that the prosecution was malicious and without probable cause. The jury found in favor of the plaintiff, and assessed the damages at $1,800, and the defendants have appealed. The court properly instructed the jury as to the advice of counsel, constituting probable cause, but he did not give any instruction on the probable cause outside of the advice of counsel. The rule is that' what facts constitute probable cause is a question of law, for the court, and that the court must, by its instruction, inform the jury what these facts are, and let them determine from the evidence whether the facts exist, where the, evidence is conflicting. Anderson v. Columbia Finance & Trust Company (20 R., 1790), 50 S. W., 40; Ahrens & Ott Manufacturing Co. v. Hoeher (106 Ky., 692) (21 R., 259), 51 S. W., 194. Appellant was charged in the criminal proceeding with the crime of embezzlement, under section 1202, Kentucky Statutes, which provides, among other things, that if an agent of any corporation shall embezzle or fraudulently convert to his own use, or the use of another, any money, property, or effects of the corporation coming into his [760] hands, as such agent, he shall be confined in the penitentiary not less than one year nor more than ten years. Embezzlement is defined as the fraudulent appropriation or conversion of the property of another by one who is intrusted with the possession. 2 Bishop, Criminal Law, section 325 (2) ; 10 Am. & Eng. Ency. of Law, 978. The words, therefore, “embezzle and fraudulently convert,” are synonymous. To constitute the offense, it is necessary there must be a criminal intent; but, where the money of the principal is knowingly used by the agent in violation of his duty, it is none the less embezzlement because at the time he intended to restore it. 10 Am. & Eng. Ency. of Law, 996, 997, and notes. The, proof before the jury showed very clearly that Miller had collected the money of the insurance company, and had not charged himself with it or accounted for it, and had failed to make good the amount after the default was discovered. It is true, he testified that the balance against him did not arise in this way, but under the proof this was a question for the jury; and the court should have instructed them that if the agent or agents of the company in taking out the warrant believed, and had such grounds as would induce a man of ordinary prudence to believe, that- Miller, while agent for the insurance company, had collected and received money belonging to the company, and had fraudulently kept the same, and had failed to pay it to the company or its authorized agent, then there was probable causa for taking out the warrant, and they should find for the defendant. The instructions of the court, as given to the jury gave them no light as to what constituted embezzlement or fraudulent conversion; and although the defendants may, in the judgment of the jury, have shown that they had reasonable cause to. believe Miller in fact guilty, as above defined, the [761] jury were required by the instruction to find for the plaintiff. Instruction “f” asked by the defendants is not as favorable to them as the law warrants, in that the definition of malice therein 'is not as favorable to the defendants as that established by the authorities elsewhere, and heretofore sanctioned by this court. In a proceeding of this kind, there must be malice in fact. This is not necessarily ill will to the defendant, but it is any evil or unlawful purpose, as distinguished from that of promoting justice. Ahrens & Ott v. Hoeher, supra. With this modification, instruction “f” should have been given, to the effect that there must be both malice and a want of probable cause, to justify a recovery, although, as a matter of fact, plaintiff was innocent of the charge. For the question in this case is not ihe guilt or innocence of Miller of the crime of embezzlement, but whether the defendants, at the time they took out the warrant, had probable cause to believe him guilty. If they had such 'cause, there can be no recovery, no matter how clearly the evidence may now show that Miller Avas innocent. Judgment reversed and cause remanded with directions to grant appellants a neAV trial. Petition for rehearing by appellee overruled.