# Ellis County State Bank v. Keever

> Texas Supreme Court · September 3, 1994 · 888 S.W.2d 790

URL: https://www.frixlaw.com/law-library/cases/9639987

## Case

- **Full name:** ELLIS COUNTY STATE BANK, Tracy Fletcher, John A. Hastings, Jr., and Don Harris, Petitioners, v. Glenn KEEVER, Respondent
- **Court:** Texas Supreme Court
- **Decided:** September 3, 1994
- **Citations:** 888 S.W.2d 790; 1994 WL 278170
- **Precedential status:** Published
- **Opinion:** Concurring in part by Hecht
- **Judges:** Gonzalez, Hightower, Doggett, Gammage, Spector, Phillips, Hecht, Cornyn, Enoch
- **Cited by:** 192 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9639987

## How later opinions describe it (automated extraction)

- holding Chapter 41 applied to statute at issue, and therefore barred prejudgment interest on punitive damages, but acknowledging that the Legislature could enlarge the imposition of prejudgment interest in statutes not governed by Chapter 41
- stating that "[p]unitive damages, being inherently penal in character, should not be enlarged by the imposition of prejudgment interest in the absence of an express legislative intent to do so"
- explaining that the detailed review required when the reviewing court reverses on factual- insufficiency grounds is not required when the reviewing court affirms
- stating that court of appeals need not detail supporting evidence when upholding the factual sufficiency of the evidence underlying the trial court=s judgment

## Opinion text

HECHT, Justice,
joined by PHILLIPS, C.J., and CORNYN and ENOCH, JJ.,
concurring in part and dissenting in part..
My prior opinion is withdrawn and this one substituted.
I agree with the Court that a plaintiff may recover damages for malicious prosecution if he proves each of the elements of that tort by a preponderance of the evidence; he is not required to meet the more exacting standard of proof — dear and convincing evidence — imposed in some kinds of cases. 1 I do not agree, however, that the evidence in this case is legally sufficient to support recovery. I would therefore reverse the judgments of the lower courts and render judgment that plaintiffs take nothing. Given that the Court affirms liability for actual damages, however, I agree that the case should be remanded to the court of appeals to consider the award of punitive damages in light of our recent decision in Transportation Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex.1994). I also agree that plaintiffs are not entitled to prejudgment interest on punitive damages.
I
Conflicting policies define the cause of action for malicious prosecution. On the one hand, persons wrongly accused of crimes should not be without remedy. On the other, the prospect of that remedy must not be so formidable as to discourage the reporting of criminal conduct to the authorities. As we observed long ago:
It is important that every citizen should be protected against malicious prosecutions, and it is equally important that crimes should be punished, in order that the law-abiding citizen may be secure in life, liberty, and property. To make the citizen liable to be mulcted in damages for an honest discharge of duty is to give immuni *800 ty to crime, and to weaken the restraining power of the criminal law, thereby endangering the security of law-abiding people.
Sebastian v. Cheney, 86 Tex. 497 , 25 S.W. 691, 694 (1894). To balance these competing interests properly, the law allows recovery for wrongful prosecution, but only in very carefully defined circumstances.
In Sullivan v. O’Brien, 85 S.W.2d 1106, 1112 (Tex.Civ.App.—San Antonio 1935, writ refd), the court stated: “Actions for damages for malicious prosecution are not favored in the law, and require more satisfactory proof than is required in ordinary lawsuits _” The courts of appeals have elaborated on this statement. In Ada Oil Co. v. Dillaberry, 440 S.W.2d 902, 914 (Tex.Civ.App.—Houston [14th Dist.] 1969, writ dism’d w.o.j.), the court stated: “The proof in malicious prosecution actions must be of a higher degree than that ordinarily required in civil cases, and it must be positive, clear and satisfactory.” Similarly, in Diamond Shamrock Corp. v. Ortiz, 753 S.W.2d 238, 241 (Tex.App.—Corpus Christi 1988, writ denied) (citations omitted), the court stated: “Actions for malicious prosecution are not favored in the law. Not only does public policy discourage the bringing of such actions, but also the proof must be positive, clear and satisfactory.” Again, in Browning-Ferris Indus. v. Lieck, 845 S.W.2d 926, 935 (Tex.App.—Corpus Christi 1992), reversed 881 S.W.2d 288 (Tex.1994), the court stated: “We recognize that the malicious prosecution cause of action must be proven by clear and convincing evidence.”
Some courts of appeals have gone further and suggested that the burden of proof should be higher in malicious prosecution actions. In Wal-Mart Stores, Inc. v. Medina, 814 S.W.2d 71, 73 (Tex.App.—Corpus Christi 1991, writ denied), the court stated: “The burden of proof is higher [for malicious prosecution cases] than for most civil cases.” The court in Montgomery Ward & Co. v. Kirkland, 225 S.W.2d 906, 909 (Tex.Civ.App.—San Antonio 1949, writ refd n.r.e.) (citations omitted), explained:
Not only does [the policy favoring exposure of crime] discourage the bringing of [malicious prosecution] actions, but also the proof must be of a higher degree than that ordinarily required in civil cases. The usual statement is that in malicious prosecution actions the proof must be positive, clear and satisfactory.
The burden of proof was upon [plaintiff] to show by positive, clear and convincing proof that there was no probable cause on the part of [defendant] to believe that [plaintiff] was guilty of embezzling....
Another court has explained, however, that the requirement of clear and convincing evidence does not alter the burden of proof at trial:
In certain types of eases, including damages for malicious prosecution, the facts must be established by clear and convincing evidence. That rule is discussed fully [in Carl v. Settegast, 237 S.W. 238, 239-240 (Tex.Com.App.1922) ].
The court in that case, and in the authorities cited therein, points out that the rule in practical effect is but an admonition to the court to use great caution in weighing the evidence.
The doctrine is firmly established that issues of fact are resolved from a preponderance of the evidence, and issues requiring a higher degree of proof than preponderance of the evidence may not be submitted to the jury.
Andrews v. Dewberry, 242 S.W.2d 685, 687 (Tex.Civ.App.—Forth Worth 1951, writ refd n.r.e.).
Neither our language in Sullivan nor the policies governing malicious prosecution actions require a heightened burden of proof in the trial court. As a general rule in most jurisdictions, at least, the standard of proof appears to be a preponderance of the evidence. 54 C.J.S. Malicious Prosecution § 83, at 607 (1987); Herbert B. Chermside, Jr., Cause of Action for Malicious Prosecution of Civil Action § 42, in 7 ShepaRd’s Causes of Action 255 (Wesley H. Winborne et al. eds., 1985); 52 Am.JuR.2d Malicious Prosecution § 136, at 268 (1970). I agree with the Court that Texas should follow this same rule.
The insistence in Sullivan of “more satisfactory proof than is required in ordinary *801 lawsuits” does serve as an admonishment to judges in weighing the evidence. This applies, as the Court notes, to trial judges in deciding whether to set aside a verdict and order a new trial, see Sanders v. Harder, 148 Tex. 598 , 227 S.W.2d 206, 209-210 (1950), and to appellate judges in reviewing the factual sufficiency of the evidence, see id; Meadows v. Green, 524 S.W.2d 509, 510 (Tex.1975) (per curiam); Omohundro v. Matthews, 161 Tex. 367 , 341 S.W.2d 401, 410-11 (1960). In addition, trial judges should exercise caution in admitting evidence in such cases.
II
Sullivan may require more than judicial caution in weighing the evidence in malicious prosecution cases. Caution in weighing the evidence is required in every case, not just malicious prosecution cases; no case allows rash weighing of the evidence. It is well to emphasize the importance of weighing the evidence in malicious prosecution cases when such important policies are in conflict, but the admonishment to caution may not be enough to protect the delicate balance between these policies.
Our requirement in Sullivan of “more satisfactory proof’ refers to the quality of evidence necessary to support liability. A jury may find that the credible evidence preponderates in favor of the plaintiff, but if that evidence, when reviewed, is not clear, convincing, positive and satisfactory, it should not support liability. One may argue that this standard should be applied in determining whether to grant a directed verdict, judgment non obstante veredicto, or new trial, in deciding motions for summary judgment, and in appellate review of both the factual and legal sufficiency of the evidence.
This higher appellate standard, applied to a review of the legal sufficiency of the evidence, should not require a weighing of the evidence. In the usual case, evidence is legally sufficient to support liability if it is more than a scintilla, that is, if there is at least some probative evidence, no matter how small. Applying this higher standard to malicious prosecution cases, liability would be sustained only if the supporting evidence is clear, convincing, positive and satisfactory. Probative evidence which does not meet this standard would not be legally sufficient for liability.
This Court has applied a heightened elear- and-eonvincing standard of evidentiary review in Doubleday & Co. v. Rogers, 674 S.W.2d 751 (Tex.1984), in reviewing the evidence of malice in a defamation case. There the standard was required by the United States Constitution. The Court did not consider that applying the standard required a weighing of the evidence which the Texas Constitution commits exclusively to the courts of appeals, Tex. Const, art. V, § 6, or it would have remanded the case to that court to perform the required review. There is no reason why the Court could not perform the same review in other cases. Whether Sullivan and the important policy of encouraging the reporting of criminal activity require a higher standard of evidentia-ry review in malicious prosecution cases is an issue which need not be decided in this case.
Ill
Regardless of whether the evidence in this case is reviewed with the special scrutiny the Court says must be used in malicious prosecution cases, or only the ordinary scrutiny required in any case, it cannot support recovery against Ellis County State Bank, Tracy Fletcher, its vice president, and John A. Hastings, Jr., its attorney. (I agree with the Court that there is no evidence to support recovery against the owner of the Bank, Don Harris.)
One element which a plaintiff must prove to establish a cause of action for malicious prosecution is that the defendant had no probable cause for initiating or procuring criminal proceedings. We have defined probable cause as the existence of such facts and circumstances as would excite belief in the mind, of a reasonable person, acting on facts within his knowledge that the person was guilty of the crime for which he was prosecuted. Akin v. Dahl, 661 S.W.2d 917, 921 (Tex.1983), cert. denied, 466 U.S. 938 , 104 S.Ct. 1911 , 80 L.Ed.2d 460 (1984). Glenn Keever was prosecuted for violating section 32.33 of the Penal Code, which states in part:
*802 (b) A person who has signed a security agreement creating a security interest in property ... commits an offense if, with intent to hinder enforcement of that interest ..., he destroys, removes, conceals, encumbers, or otherwise harms or reduces the value of the property.
(c) For purposes of this section, a person is presumed to have intended to hinder enforcement of the security interest or lien if, when any part of the debt secured by the security interest or lien was due, he failed:
(1) to pay the part then due; and
(2) if the secured party had made demand, to deliver possession of the secured property to the secured party.
There is no question that Keever failed to pay the $6,000 plus interest which he owed the Ellis County State Bank in May 1987, or that after the Bank made demand for return of the collateral, he refused to deliver possession of the property to the Bank for well over a year. There is evidence that Keever offered to allow the Bank to come get the collateral, and evidence that the Bank failed to keep appointments to do so. But it is undisputed that Keever never delivered or even offered to deliver the collateral to the Bank, which he was obliged to do by his security agreement with the Bank. After its loan was in default for over a year and Keever had paid nothing and had not turned over any of the collateral, the Bank had reason to believe that Keever was violating section 32.33.
A defendant in a malicious prosecution case is presumed to have acted reasonably, in good faith, and with probable cause, until the plaintiff produces contrary evidence. Akin, 661 S.W.2d at 920 . In this case, there is no direct evidence that the Bank, Fletcher and Hastings lacked probable cause for initiating criminal proceedings against Keever. The only evidence at all, cited by the Court, is an inference from a statement made by Hastings and a nondisclosure by Fletcher. Hastings told the district attorney that Keever had reacted violently to a collection letter when in fact he had not. Fletcher failed to tell the grand jury that Keever had made appointments for the Bank to pick up the collateral.
Hastings’ misrepresentation was absolutely immaterial. Whether Keever reacted violently or calmly to collection efforts, or whether he reacted at all, has nothing whatever to do with whether he violated section 32.33. Assuming Hastings intentionally lied to the district attorney, one cannot infer from that fact alone whether he had probable cause to think that Keever had violated section 32.33 or not.
Fletcher’s “nonstatement” is problematic in several respects. First, Fletcher has not conceded that the Bank missed appointments set up by Keever. Fletcher may have been wrong about this, and there is evidence that she was. But whether she was in fact right or wrong about whether appointments were missed — and since the jury could have found she was wrong, we will assume that they did — one cannot infer from evidence of missed appointments that Fletcher’s failure to mention them to the grand jury shows that she had no reasonable belief that Keever had violated section 32.33. The reason Fletcher did not tell the grand jury about missed appointments may just as well have been that she did not believe any had occurred. Second, omitting information is not the equivalent of giving false information. A person may fail to state information because it slips his mind, or because he does not consider it important, reasons which cannot justify giving false information. Inferring a lack of probable cause from a failure to disclose information is more difficult than inferring the same from a misrepresentation of facts. Thirdly, and most importantly, the omitted information is immaterial in this case. There is disputed evidence that Keever made appointments with the Bank to pick up the collateral, and the Bank failed to appear. But there is undisputed evidence that the Bank made appointments which Keever failed to keep. And there is no question that Keever never delivered the collateral to the Bank, as he was obliged to do, for more than a year after his loan was in default. It cannot reasonably be inferred from the fact that the Bank missed appointments with Keever — assuming, as the jury could *803 have found, it is a fact — that the Bank had no probable cause to believe that Keever was violating section 32.33.
By any measure, there is no probative evidence that the Bank and its employee and attorney lacked probable cause to procure the criminal prosecution of Keever. For this reason, I would reverse the judgment of the court of appeals and render judgment that plaintiff take nothing.
IV
The Court, however, affirms the liability of the Bank and its vice president and attorney, individually, for malicious prosecution. Given this decision, the award of punitive damages must be reviewed by the court of appeals in accordance with Transportation Ins. Co. v. Morid, 879 S.W.2d 10 (Tex.1994). Accordingly, I join in that part of the Court’s judgment remanding the case to the court of appeals. I also join the Court in holding that prejudgment interest should not be awarded on punitive damages.
. E.g., Brown v. Edwards Transfer Co., 764 S.W.2d 220, 223 (Tex.1988) (paternity of illegitimate person in wrongful death case); Doubleday & Co. v. Rogers, 674 S.W.2d 751 (Tex.1984) (actual malice in a defamation case involving public officials and public figures); State v. Addington, 588 S.W.2d 569 (Tex.1979) (civil commitment proceedings); In re G.M., 596 S.W.2d 846 (Tex.1980) (involuntary termination of parental rights); Tex.Fam.Code §§ 11.15, 15.024-.025 (same); id. § 5.02 (separate property); id. §§ 12.02(b), 13.05 (paternity); id. § 21.32 (court ordered child support); Tex.Health & Safety Code §§ 81.169, .171-.173, .190 (court ordered management of persons with communicable diseases); id. §§ 462.067-.069, .075 (court ordered treatment for chemically dependent persons); id. §§ 574.031, .033-035, .069, .106 (court ordered mental health services); Tex.Prop.Code §§ 92.0563, .058 (landlord/tenant statutory remedies); TexTax Code §§ 151.159, .307 (tax exemption for export goods); TexProb.Code § 42 (paternity); id. § 145 (approval of independent estate administration); id. §§ 222, 761 (removal of personal representative, guardian); id. §§ 236, 236A, 776-77 (use of estate/trust corpus); id. § 684 (appointment of guardian); id. § 438 (presumption of revocable trust); TexR.Disciplinary P. 9.04 (1992), reprinted in TexGov’t Code, tit. 2, subtit. G app. (Supp.1994) (defense to attorney reciprocal discipline).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9639987. Public record. Not legal advice.