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Fort Wayne Mortgage Co v. Carletos

Michigan Court of Appeals
Mar 4, 1980
95 Mich. App. 752 (Mich. Ct. App. 1980)

Summary

stating that "[t]he elements of malicious prosecution are," among other things, " ‘a criminal proceeding instituted or continued by the defendant against the plaintiff’ " (quoting Wilson v. Yono , 65 Mich.App. 441, 443, 237 N.W.2d 494, 496 (1975) )

Summary of this case from Turner v. Thomas

Opinion

Docket No. 78-5294.

Decided March 4, 1980. Leave to appeal denied, 408 Mich ___.

Collins Einhorn, P.C., for plaintiff.

James F. Finn and Mark S. Michael, for defendant.

Before: J.H. GILLIS, P.J., and BEASLEY and R.M. RANSOM, JJ.

Circuit judge, sitting on the Court of Appeals by assignment.



Defendant Carlos Carletos (hereinafter defendant) appeals as of right from the trial court's order granting plaintiff's motion for summary judgment, which dismissed defendant's counterclaim alleging malicious prosecution.

The record indicates money was loaned by plaintiff for several construction projects being undertaken by various construction companies controlled by defendant. The loans were insured by the Federal Housing Administration (FHA). In order to have the money distributed as needed, Carletos would obtain a "construction draw" by submitting a "draw request form", FHA form 2403. Before plaintiff would release any money, the form had to be signed by various persons, including certain FHA officials.

Barbara Peterson, an employee of plaintiff in the accounting department, discovered a $.60 discrepancy in one of defendant's accounts. The FHA was informed of the discrepancy and a Federal investigation followed, which appeared to indicate that $419,000 had been paid to defendant by means of forged draw requests. Defendant was prosecuted on the charge of violating 18 U.S.C. § 1010 and was acquitted.

Thereafter, plaintiff filed a complaint against defendant and one of his construction companies seeking recovery of the monies which the defendant allegedly had obtained by fraudulent means. Defendant filed a counterclaim in which he alleged that he had become short of money on one project and, thus, had entered into an agreement with certain of plaintiff's agents, whereby plaintiff would be able to advance the necessary moneys to defendant. The agreement allegedly called for defendant to present to plaintiff forged draw requests relating to one of defendant's construction projects, with plaintiff then advancing monies to defendant for the other project which needed the additional monies, on the understanding the advances would be repaid by defendant when he received additional funding from the Federal government. According to defendant, plaintiff's employees knew the above arrangement was undertaken "solely for the purpose of internal accounting control" and not to defraud the Federal government.

Defendant further alleged that in spite of its knowledge concerning the above agreement, plaintiff presented the forged draw requests either to HUD or the FBI as evidence of defendant's intent to defraud the Federal government.

Plaintiff sought summary judgment on the counterclaim pursuant to GCR 1963, 117.2(1) on the ground that Barbara Peterson only provided information to Federal authorities and that prosecution was based "solely upon the judgment and discretion of Assistant United States Attorney".

On appeal, defendant argues the trial court erred in granting plaintiff's motion for summary judgment because the counterclaim did state a claim upon which relief could be granted. We agree.

A motion for summary judgment pursuant to GCR 1963, 117.2(1), which alleges the opposing party has failed to state a claim or defense, is tested by reference to the pleadings alone. Todd v Biglow, 51 Mich. App. 346, 349; 214 N.W.2d 733 (1974). The well-pleaded allegations of the claimant must be accepted as true, and summary judgment must be denied unless the claim is so untenable as a matter of law that no factual development could support the claim. Bob v Holmes, 78 Mich. App. 205, 211; 259 N.W.2d 427 (1977).

The elements of malicious prosecution are: "(1) a criminal proceeding instituted or continued by the defendant against the plaintiff, (2) termination of the proceeding in favor of the accused, (3) absence of probable cause for the proceeding, and (4) `malice' or a primary purpose other than that of bringing the offender to justice." Wilson v Yono, 65 Mich. App. 441, 443; 237 N.W.2d 494 (1975). The Court in Ringo v Richardson, 88 Mich. App. 684, 691; 278 N.W.2d 717 (1979), further stated:

"It is true that a defendant may escape liability for malicious prosecution by showing that he in good faith fully and fairly revealed all material facts within his knowledge to the police or prosecutor, who then in exercise of his uncontrolled discretion proceeded to prosecute, see Wilson v Yono, supra, and cases cited therein. A defendant may not escape liability, however, if he failed to make a full and fair disclosure of all material facts, if he gave false information, or if he interfered with the official's discretion."

On the basis of the above law, we find the trial court was incorrect in ruling an action for malicious prosecution could not be established because defendant was indicted by a Federal grand jury. Normally, an indictment by a grand jury will form the basis upon which to establish probable cause. Nevertheless, if a full and fair disclosure is not made, a defendant may not escape liability for malicious prosecution, even if a grand jury returns an indictment. Thus, the return of an indictment by a grand jury, standing alone, will not establish probable cause.

Although certain malicious prosecution cases have held that malice may be inferred from a want of probable cause, we are unwilling to extend such rule to the case at bar. In those cases wherein it is alleged that the individual or entity which instituted the proceedings had actual knowledge of all the material facts but engaged in selective disclosure of only inculpatory information, such rule is properly applied. In such cases, the inference that the person or entity acted for a primary purpose other than that of bringing the offender to justice is warranted.

Drobczyk v Great Lakes Steel Corp, 367 Mich. 318; 116 N.W.2d 736 (1962), Weiden v Weiden, 246 Mich. 347; 224 N.W. 345 (1929).

Such conclusion does not obtain here. It was not here alleged that the employee who disclosed the inculpatory information knew of the exculpatory information nor that those who knew of such exculpatory information knew that Carletos was being prosecuted. Lack of probable cause here is premised on the general rule of law which charges a principal with the knowledge of each of its agents.

Macomb v Wilkinson, 83 Mich. 486; 47 N.W. 336 (1890), Loveland v Bump, 198 Mich. 564; 165 N.W. 855 (1917).

An inference cannot be based upon evidence which is uncertain or speculative or which raises merely a conjecture or possibility. See People v Orsie, 83 Mich. App. 42; 268 N.W.2d 278 (1978). We hold that to infer malice from a lack of probable cause under the circumstances of the present case would effect a violation of this rule. The inference here cannot fairly be drawn.

The inference, however, is not necessary in this case. The malice of a corporation consists in the motives which prompt the action of its representatives. Tutton v Olsen Ebann, 251 Mich. 642, 650; 232 N.W. 399 (1930). Defendant's counterclaim for malicious prosecution alleges that plaintiff submitted to Federal officials the allegedly forged documents "all for the purpose of seeking to avoids [sic] its obligations to [the defendant]". The allegation satisfies the malice element of defendant's cause of action in the sense that it states that plaintiff's primary purpose was other than that of bringing the defendant to justice. See Ringo v Richardson, supra.

The other elements of defendant's cause having been sufficiently alleged, the grant of summary judgment on the ground that defendant failed to state a claim upon which relief can be granted, GCR 1963, 117.2(1), was erroneous. We remand to the trial court but note that our ruling should not be interpreted to prejudice the right of Fort Wayne Mortgage Company to seek summary judgment under GCR 1963, 117.2(3) if deemed appropriate.

Reversed and remanded.


Summaries of

Fort Wayne Mortgage Co v. Carletos

Michigan Court of Appeals
Mar 4, 1980
95 Mich. App. 752 (Mich. Ct. App. 1980)

stating that "[t]he elements of malicious prosecution are," among other things, " ‘a criminal proceeding instituted or continued by the defendant against the plaintiff’ " (quoting Wilson v. Yono , 65 Mich.App. 441, 443, 237 N.W.2d 494, 496 (1975) )

Summary of this case from Turner v. Thomas
Case details for

Fort Wayne Mortgage Co v. Carletos

Case Details

Full title:FORT WAYNE MORTGAGE COMPANY v CARLETOS

Court:Michigan Court of Appeals

Date published: Mar 4, 1980

Citations

95 Mich. App. 752 (Mich. Ct. App. 1980)
291 N.W.2d 193

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