May v. StateMay v. State
Appellant, J. M. May, was convicted in the Circuit Court, First Judicial District of Chickasaw County, of embezzlement. The offense involves a wrongful conversion to his own use, by a promoter of a proposed insurance company, of money paid by a subscriber for a preincorporation subscription for shares of stock.
Omitting the formal parts, the indictment charged: ‘ ‘ That J. M. May in said District, County and State, on or about the 20th day of November, A. D., 1958, being then and there the trustee and agent of one W. V. Metts have in his possession and under his care as such, money and property of the said W. V. Metts in the amount of $2,000.00 good and lawful money of the United States, and did thereafter, without the consent of the said W. Y. Metts fraudulently and feloniously secrete, conceal and convert same to his own use, and feloniously embezzle the same, . . . .”
Apparently the indictment was based upon Miss. Code 1942, Bee., Sec. 2115 which provides in part that, if any trustee or agent of any private person “shall embezzle or fraudulently secrete, conceal, or convert to his own use, or make way with, or secrete with intent to embezzle or convert to his own use, any goods, rights in action, money, or other valuable security, effects, or property of any kind or description which shall have come or been intrusted to his care or possession by virtue of his office, place, or employment, either in mass or otherwise, he shall be guilty of embezzlement, . . . . ”
The constituent elements of the offense are (1) an agent or trustee of a private person, (2) embezzling or converting to his own use, (3) rights in action, money, or other valuable security, effects or property of any kind, (4) which have been intrusted to his care or possession by virtue of his position or employment. Code Sec. 2115; 18 Am. Jur., Embezzlement, Sec. 2.
Defendant later urged Metts to subscribe for additional stock in the proposed company. Metts told him he had a certificate of deposit in the Bank of Houston for $2,200, which could not be cashed until May 1959. Actually its maturity date was October 6, 1959. Defendant replied that he could put up this certificate as security for the subscription. Apparently Metts delivered it to May without any assignment at the time, but later May advised him the “trustees” of the proposed company would not take the certificate without an assignment. Metts agreed to subscribe to $2,000 worth of stock. On November 20, 1958, he endorsed and subscribed the certificate: “For value received I, we or either of us do hereby assign this certificate to J. M. May. ’ ’ Metts said defendant was supposed to put the instrument in the hank with other money which he had received to organize the company, and, when organized, Metts was to receive $2,000 worth of stock. Defendant advised him that no person could purchase more than that amount. Since the certificate was in the principal amount of $2,200, and Metts had already given May a check for $100, May took the assigned certificate and gave Metts his check for $300. In short, Metts turned over to defendant “as
On November 19, 1958, one day before assignment of the certificate, Metts signed, at May’s request, a written subscription for 250 shares of preferred stock of the proposed company. The subscription letter further stated: “I have $2,000.00 fully paid. And I do hereby authorize you to use said sum for the purpose of capitalizing the Company and in payment of all necessary expenses of organizing the Company. . . .
“I understand that the shares of stock will be delivered to me when the charter is issued and organization completed. ’ ’
May told Metts that he had already talked with the Insurance Commissioner of Mississippi, who had approved the proposed incorporation. Metts later ascertained this was false. He said he turned the money over to May for safekeeping, until the shares were issued to him. He never received any stock. This Court may take judicial notice of the official records of the Secretary of State and the Insurance Commissioner. Miss.-Gulfport Compress and Warehouses, Inc. v. Public Service Comm.,
E. A. Enochs, President of the Bank of Houston, saw May for the first time when he came to the bank to get a transfer to himself of Metts’ certificate of deposit. • Enochs refused, because it had not been assigned to him. Later May returned with Metts’ assignment, and the account was transferred by the bank to May. Subsequently on December 5, 1958, May endorsed on the certificate over his signature “Pay to Tyler (Texas) Bank and Trust Company or order”. The Bank of Houston then paid the proceeds to the Tyler bank. Enochs identified defendant’s signature on the certificate.
Appellant argues that the verdict is contrary to the law and the overwhelming weight of the evidence, since Metts delivered the money to May not as his agent or trustee, but for purchase money for the stock, creating between them only the relationship of debtor and creditor. This requires an analysis of the characteristics of a subscriber-promoter status.
The defendant was a promoter of a proposed insurance company. He sold Metts a preincorporation subscription for shares of stock. In the absence of a special agreement to the contrary, supported by a valuable consideration, a subscription to the capital stock of a corporation, to be later organized, is nothing more than an offer of a specific sum for the use of the corporation when it comes into existence. Hence the offer may be withdrawn at any time before the organization of the ■corporation. Wright Brothers v. Merchants and Plant
Hence the promoter of a proposed corporation who solicits and procures stock subscriptions is the agent of the subscribers to hold the subscriptions until the corporation is formed, and then turn them over to it without any further act of delivery on the part of the subscribers. 13 Am. Jur., Corporations, Sec. 226. Although promoters are not trustees in a strict sense, they occupy a fiduciary or quasi-trust relation both toward the corporation when it comes into existence, and toward the persons who are subscribers for its capital stock. 18 C. J. S., Corporations, Sec. 120. The promoter is not in any sense the agent of a corporation before it comes into existence, because there cannot be an agency unless there is a principal.
In this instance, May was the promoter of the proposed insurance company, and, when he received Metts’ subscription and the $2,000 represented by the certificate of deposit, he received the money as the agent and trustee of the preincorporation subscriber, Metts. See 18 C. J. S., Corporations, Secs. 134-136; Deposit Guaranty Bank and Trust Co. and J. I. Magee v. Luke,
With these basic principles in mind, it is manifest that the evidence amply warranted appellant’s conviction of embezzlement, which is the wrongful appropriation or conversion of property where the original taking was lawful or with the consent of the owner.
Defendant received $2,000 from Metts under the latter’s preincorporation subscription. He was the promoter of the proposed company and, in receiving the money, he took it as Metts’ agent and trustee. The money was intrusted to defendant’s possession by virtue of this agency and fiduciary relation. Further, defendant fraudulently converted it to his own use. He obtained from Metts an assignment of the certificate. The money was to be held by him to pay for Metts ’ subscription when the company was organized. However, appellant converted that money intrusted to him by endorsing, transferring and paying it to the Tyler, Texas, Bank. The jury could find this was a conversion for his own personal use. If there were any other explanation, defendant could have given it at the trial, but he elected not to testify. The subscription letter which Metts signed on November 19, 1958, did not alter the fiduciary and agency relation between him and defendant.
Lawson v. State,
It was not error to refuse an instruction stating that Metts “was repaid for the check to J. M. May, trustee, for $100, and you shall not consider such $100 check to J. M. May, trustee.” The indictment charged appellant with embezzling $2,000, thereby giving him credit for having paid Metts the $100 in question. The refused instruction could not refer to restitution. Sherman v. State, supra. It was an improper comment on the evidence concerning something that was not an issue.
Affirmed.