§46.4 Defense of Advice of Counsel

The Case: Sullivan v. Young , 678 S.W.2d 906 (Tenn. Ct. App. 1984).

The Basic Facts: The defendant fired the plaintiff and subsequently asked his attorney to investigate the matter. In the course of his investigation, the attorney turned over all of the business' books and records to an accountant who, in turn, reported that the plaintiff and another employee had diverted funds from the business for their personal use. The attorney contacted the District Attorney-General who advised him to contact the police. The attorney contacted the police and was advised that the evidence warranted criminal prosecution. The defendant swore out a warrant for fraudulent breach of trust against the plaintiff. After further review by the prosecutor, the warrant was dismissed.

The Bottom Line:

• "With reference to the claim of malicious prosecution, it is necessary for the plaintiff to establish that a criminal proceeding has been instituted by the defendants against the plaintiff, that such proceeding terminated in favor of the accused, that there was an absence of probable cause, and that there was malice or a primary purpose other than that of bringing the offender to justice. Landers v. Kroger Co., [539 S.W.2d 139 (Tenn. Ct. App. 1976)]." 678 S.W.2d at 911.
• "The defendants contend there is no want of probable cause in this case, based upon the defense of advice of counsel. Generally, probable cause is established where prosecution was instituted with advice of counsel. Lawson v. Wilkinson, [447 S.W.2d 369 (Tenn. Ct. App. 1969)]. The prosecuting attorney is counsel whose advice can constitute a defense to an action for malicious prosecution. Mullins v. Wells, [450 S.W.2d 599 (Tenn. Ct. App. 1969)]." Id.
• "In Tennessee, it is settled that to invoke the defense of advice of counsel, the defendant 'must state not only all material facts within his knowledge but all facts which he had reasonable ground to believe existed at the time of making the statement, or all material facts which he could have ascertained by reasonable diligence.' Union Stockyards, Inc. v. Grissim, 13 Tenn. App. 115, 125 (Tenn. App. 1930)." Id. at 912.
• "We note, however, that there is a marked difference in cases where a person reports what he knows to the police or other public official. In Cohen v. Ferguson, [336 S.W.2d 949 (Tenn. Ct. App. 1959)], the defendant called the police to have them investigate plaintiff's conduct. The police assumed control of the investigation, and brought charges against the plaintiff. The defendant was not liable for malicious prosecution because he furnished information to the authorities. The Court quoted with approval the following language from [34 Am. Jur., Malicious Prosecution, § 47]:

  It is to be noted that the conduct of the defendant is to be weighed in view of what appeared to him at the time of instituting the prior proceeding, not in light of subsequently appearing facts.

  336 S.W.2d at 952." Id.
• "In Kauffmann v. A.H. Robins Company, [448 S.W.2d 400 (Tenn. 1969)], the defendant filed a complaint with the Tennessee Board of Pharmacy against the plaintiff, who subsequently sued the defendant for malicious prosecution. The Supreme Court noted that the 'situation is not unlike that of reporting violations of criminal law to law enforcement officers. Where facts are fully disclosed in good faith and with probable cause to believe they are true, a reporting party is not liable in an action for malicious prosecution if the public official erroneously institutes a criminal proceeding.'" Id.
• "It should be remembered that the question is not whether the accused is really guilty, but whether the good and reasonable grounds exist for the prosecutor to believe that he is. Cohen v. Ferguson, supra. Where law enforcement officials conduct an independent investigation and make their own evaluation therefrom, it is sufficient to establish the defense of advice of counsel if the prosecutor shows that he has made a full disclosure in good faith of the facts within his knowledge at the time of the investigation." Id.
• "The record discloses in this case that the defendants made a thorough investigation before instituting proceedings, that they conferred both with police officers and the office of the attorney-general, and that they made a full disclosure of all facts known to them as a result of their examination of the books and records." Id.