Texas Skaggs, Inc. v. Graves
582 S.W.2d 863 (1979)
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Rule of Law:
A malicious prosecution claim requires proof that a defendant instituted or continued a criminal proceeding without probable cause, with malice, which terminated in the plaintiff's favor and caused damages. Continuing a prosecution after receiving information that negates criminal intent, such as full payment of a debt, can establish the elements of lack of probable cause and malice.
Facts:
- Sharon Graves, a former employee of Texas Skaggs, Inc. (Skaggs), wrote two checks for groceries in January 1977 totaling $34.70.
- The checks were returned for insufficient funds after Graves' estranged husband withdrew all money from their joint account without her knowledge.
- When contacted by Skaggs on January 27, 1977, Graves explained the situation and promised to pay as soon as she received money from the Skaggs credit union; a Skaggs employee agreed to wait for the payment.
- On February 17, 1977, Graves received her funds and immediately mailed a money order to Skaggs for the full amount of the checks.
- Skaggs admitted it received the payment for the checks.
- On February 18, 1977, a Skaggs manager filed a police report against Graves for violating the Arkansas Hot Check Law, and on February 22, he filed an affidavit for her arrest.
- On March 3, 1977, while Graves was shopping at the store, a Skaggs manager summoned the police, who arrested her in front of other shoppers and employees.
- After the arresting officer confirmed with Skaggs by phone that the checks had been paid and released Graves, another Skaggs employee insisted to the officer that the company still wanted Graves prosecuted.
Procedural Posture:
- Sharon Graves sued Texas Skaggs, Inc. for malicious prosecution in a trial court.
- A jury returned a verdict in favor of Graves, awarding her $20,000 in actual damages.
- The trial court entered a judgment consistent with the jury's verdict.
- Skaggs filed a motion for judgment notwithstanding the verdict and a motion for a new trial, both of which the trial court denied.
- Skaggs (appellant) appealed the trial court's judgment to the Court of Civil Appeals of Texas (the intermediate appellate court).
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Issue:
Did Texas Skaggs, Inc. commit malicious prosecution by instituting and continuing a criminal 'hot check' prosecution against Sharon Graves after she had paid the full amount of the checks and after Skaggs had notice of the payment?
Opinions:
Majority - Ray, Justice
Yes, Texas Skaggs, Inc. committed malicious prosecution by instituting and continuing a criminal proceeding against Sharon Graves without probable cause and with malice. The court found that all five elements of malicious prosecution under Arkansas law were met. First, Skaggs clearly instituted and continued the prosecution. Second, the dismissal of the criminal case for lack of evidence constituted a termination in Graves' favor. Third, Skaggs lacked probable cause because it was aware of the circumstances, had agreed to wait for payment, and had received full payment before Graves' arrest; continuing the prosecution after confirming payment further demonstrated the absence of probable cause. Fourth, malice was inferred from the lack of probable cause and was independently supported by Skaggs' insistence on prosecuting Graves even after she had paid the debt and been released, indicating a motive other than bringing a criminal to justice. Finally, Graves suffered damages from the public humiliation and resulting harm to her employment prospects.
Analysis:
This case illustrates the critical distinction between using the criminal justice system to pursue legitimate claims versus misusing it for private purposes like debt collection. The court's analysis emphasizes that probable cause is not a static determination; information learned after a complaint is filed can negate it, and continuing a prosecution in light of such information can constitute malice. This decision serves as a significant deterrent to creditors who might otherwise use the threat of criminal charges as leverage. It reinforces that once a civil debt is satisfied, the justification for a related criminal action based on intent to defraud is significantly, if not completely, undermined.
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