37 S.C. 468 | S.C. | 1892
The opinion of the court was delivered by
For the purposes of a statement of the facts out of which this controversy arose, we adopt the statement thereof by the presiding judge on the Circuit:
*476 “This action was commenced on the 11th day of February, 1889, by service of summons and complaint on the first named defendant. An injunction was granted, and a receiver appointed. Subsequently P. A. Emanuel, the Bank of New York, N. B. A., and the Fidelity and Casualty Company of New York, were made parties. The complaint alleges that the defendant company is indebted to the plaintiff and to others, is insolvent, and has ceased to operate its property, which is, therefore, unproductive; that a meeting had been called for the purpose, among other things, of authorizing a mortgage of its property, and demands an injunction, the appointment of a receiver, and the sale of the corporation property and franchise. The answer of the original defendant company substantially admitted all the allegations of the complaint, except the indebtedness to the plaintiff', but alleges that its insolvency was caused by the wrongful appropriation by plaintiff of six thousand dollars of its funds, minutely detailing the manner thereof, and prays that its creditors may be called in, an accounting be had among the stockholders, and that plaintiff be required to pay over said six thousand dollars.
“The answers of P. A. Emanuel and the Bank of New York allege that the six thousand dollars mentioned in the answer of the original defendant were received by the plaintiff as treasurer thereof (as treasurer of the Aiken Mining and Porcelain Manufacturing Company), and was appropriated by him in such a way as to constitute a breach of trust with fraudulent intent, to wit, larceny; aud that the defendant, the Fidelity and Casualty Company, had entered into bond to make good to the original defendant, to the extent of five thousand dollars, any such misappropriation on certain other conditions which had been complied with ; that said bond had been assigned to said bank as collateral to a debt. The answer of the bank also includes an alleged misappropriation of three thousand and thirty dollars by the plaintiff as treasurer, by using it to develop the Nonpareil mine, and judgment is asked against the Security Company for the entire penalty of their bond, five thousand dollars, or enough thereof to satisfy said debt of said bank, and the balance to the general creditors of the original defendant.*477 The answer of the Fidelity and Casualty Company denies that the six thousand mentioned in the answers was the property of the original defendant, or received by the plaintiff as its secretary and treasurer, admits the execution of the bond, but alleges it was obtained on the false and fraudulent representation that plaintiff, as treasurer, could only handle money from sale of clays, while the alleged breach is the misappropriation of money from another source, and that the bond is, therefore, void. Plaintiff replies, that he and Emanuel were the owners of the property, to wit, the Nonpareil stock, for which he received the said six thousand dollars, and that he received it for them as co-owners, and not as treasurer of the original defendant ; denies that the cause of the insolvency of the company was caused by his act, or that, he has failed to account for any moneys received as such treasurer.”
The cause came on to be heard by his honor, Judge Norton, at Aiken, on the oral and documentary testimony taken by the master in the cause, and, on the 23d July, 1891, he filed his decree. From this decree the Bank of New York, N. B. A., alone appealed, on the following grounds:
1. Because the court erred in holding that Murray, when sued for money in his hands as treasurer, could set off a debt due to him for money paid to a corporation without its order.
2. Because it erred in allowing Murray to set off against his debt to the company, payments made to Bryant and Klecldey, who were not creditors of the Aiken Mining and Porcelain Manufacturing Company.
3. Because it erred in holding that the twenty-five shares of the Nonpareil Kaolin Company, standing in the name of Emanuel and Murray, as “trustees for the stockholders of the Aiken Mining and Porcelain Manufacturing Company,” belonged to the trustees, and not to the Aiken Mining and Porcelain Manufacturing Company, and that the six thousand dollars arising from the sale of said stock also belonged to said trustees, and not to the said company.
4. Because it should have found that the 12á shares subscribed for by Emanuel, and the proceeds thereof, belonged to the Aiken Mining and Porcelain Manufacturing Company.
6. Because it erred in holding that the declaration of trust in the certificate “was not intended to indemnify the corporation whose funds the treasurer determined to embezzle, but was intended to indemnify the individual stockholders, and chiefly to indemnify Murray himself, against the consequences of his contemplated misconduct.”
7. Because it should have held that, whether said stock belonged to said company, or was pledged to it, the Aiken Company was entitled to receive the proceeds of the stock when sold; that the receipt of such proceeds by Murray was within the scope and in the line of his official duty as treasurer, and that his subsequent conversion of the funds so received was a breach of trust, with fraudulent intent, for which the Fidelity and Casualty Company was liable under the terms of its guarantee.
8. Because the court erred in acquitting Murray of a fraudulent intent, while finding that he had committed a breach of trust, in using the corporate funds without authority in developing the Kaolin Company, and should have found that the Fidelity and Casualty Company was liable for the three thousand dollars of the corporate funds so embezzled by him.
9. Because it erred in holding that Murray had paid his share of the purchase money of the land bought from the Hill & Johnson Company, by advances which he made to the Kaolin Company under the agreement entered into, at the time of the purchase, between Emanuel, Murray, and the other co-owners.
The respondent served this notice: “Please to take notice that upon the appeal to the Supreme Court herein, instituted by you, we will contend before said court, that the judgment of the Circuit Judge, wherein he held that the defendant, the Fidelity and Casualty Company of New York, was not responsible on its bond for the conduct of the plaintiff for the fund of
Early in the year 1888, Joseph E. Murray learned that a rich deposit of kaolin had been discovered on the lands owned by the Hill and Johnson Manufacturing Company, in Aiken County, and that two of his friends, George O. Walker and W. W. Miller, had obtained the control of the same. This information was conveyed by Murray to Emanuel. Tiiey sought out Walker and Miller for the purpose of obtaining an interest with them. Murray and Emanuel proposed to Walker and Miller to go into the Aiken Mining and Porcelain Company with their property, but this proposition 'was declined. Finally, the firm, Walker, Miller, Murray, and Emanuel, bought from the Hill and Johnson Manufacturing Company the land on which the kaolin mine was located. • These four became incorporated, under the laws of the State, as the Nonpareil Kaolin Company, with a capital stock of $5,000, in which stock each had 123 shares, at $100 per share. The certificates for such stock were issued to George O. Walker, lor 123 shares; to W. W. Miller, 123 shares; and to P. A. Emanuel and Joseph E. Murray, as trustees of the stockholders of the Aiken Min
At the time the minds of the said Walker, Miller, Murray, and Emanuel met in agreement, in April, 1888, it was agreed that Murray and Emanuel should furnish the money essential to the development of the Nonpareil Kaolin Company. The only money paid by the parties, Walker, Miller, Murray, and Emanuel, to the Hill and Johnson Manufacturing Company, for the property that afterwards formed the basis of the Nonpareil' Kaolin Company, was $600, paid by Emanuel. The testimony of Emanuel and Murray, while agreeing as to the reason existing and controlling them in not taking the twenty-five shares in the Nonpareil Kaolin Company in the name of the Aiken Mining and Porcelain Manufacturing Company, was, that they feared such step would be illegal, because of the inability in law of one corporation, as such, taking stock in another distinct corporation; yet these two parties differ somewhat in their testimony as to their conduct afterwards. Emanuel says that the property was purchased for the Aiken Mining, &c., Company, and to enhance its value, and that it was because of this fact that the stock issued to himself and Murray, was taken in their names as trustees for the stockholder's of the Aiken Mining, &c., Company. Further, that he had the money, $600, that he paid for the property, and the ownership of such stock, entered on the books of the Aiken Mining, &e., Company on the 11th June, 1888; and that all the money used in the development of the Nonpareil Kaolin Company was furnished by the Aiken Mining, &c., Company, and duly entered upon their books. Murray says in his testimony, in relation to these transactions, that he and Emanuel never made the agreement that the property purchased by himself, Emanuel, Walker, and Miller, from the Hill and Johnson Manufacturing Company, so far as his and Emanuel’s shares therein were concerned, were really for the Aiken Mining, &c., Company.
Here the two flatly contradict each other. Murray admits
Consider what follows in the history of these transactions. Here is the letter Murray writes in August, 1888, in order to procure a sale of this stock:
“August 11th, —8.
“Messrs. G. 0. Walker and W. W. Miller—Gentlemen: In place of the hasty letter written to you by myself, and as trustee in*483 behalf of the Aiken Mining and Porcelain Manufacturing Company, I make for said company, under instructions of its president, the following proposition to you: We will sell you our twenty-five shares of the capital stock of the Nonpareil Kaolin Company, the same being all our right, title, and interest in said company, for the sum of six thousand dollars cash. This proposition is made with the understanding that the Nonpareil Kaolin Company shall pay its own debts, except those now due and posted upon its books, and agreed to by its president, P. A. Emanuel. It is further understood that the Nonpareil Kaolin Company shall carry out certain contracts made by its president, P. A. Emanuel, with Mr. J. F. Ferris, for the delivery f. o. b. cars at Langley, S. C., of nonpareil clays at 15.25 per ton, as ordered by him between this time and September, 1889.
“Tours truly, J. E. Murray, Trustee, &c.”
Three days after this date, Murray enters into the following-agreement: “August 14th, 1888.
“Memorandum of AgreemenV
“The Aiken Mining and Porcelain Manufacturing Company agrees to sell to T. G-. Lamar & Co. all their stock in the Nonpareil Kaolin Company for the sum of six thousand dollars, payable to them on or before the first day of September, 1888. The said Aiken Mining and Porcelain Manufacturing Company to assume and pay all debts of the Nonpareil Kaolin Company that have been agreed to by President P. A. Emanuel. I am authorized by P. A. Emanuel, president, to make this sale, and will carry it out in good faith upon payment by said T. G. Lamar & Company of the said six thousand dollars. It is further agreed to place all the certificates of stock referred to, being twenty-five shares, in the hands of E. S. Hammond, Esq., in escrow, to be delivered to T. G. Lamar & Company, properly transferred on the books of the Nonpareil Kaolin Company to them, upon payment of the said six thousand dollars.
“J. E. Murray, Trustee, &c.”
“We, as stockholders of the Nonpareil Kaolin Company, agree to this sale of stock. W. W. Miller, Geo. O. Walker.”
All these papers were executed by Murray during the absence
Adopting this view of the law, does it not seem irresistibly clear that Murray knew and intentionally pursued a line of conduct that recognized the ownership of these twenty-five shares of stock in the Nonpareil Kaolin Company to be in the Aiken Mining and Porcelain Manufacturing Company? Trace his conduct step by step from April, 1888, to the 28 August, 1888, and is not this made manifest? He denies all knowledge' of the entries in the books, and yet, by one of the by-laws that he himself adopted, all the acts of any assistant he might place in charge of his books are saddled upon Mm as secretary and treasurer. That letter of the 11th August shows a wonderfully acute recognition of what those books disclose. Then the agreement of the 14 August, 1888—how clearly he demonstrates his practical conversance with the affairs of the parties, by taking care of Ferris’ contract for kaolin, the price, the place of shipment, the terms of shipment. His very demand against the Aiken Mining, &c., Company, from its commencement as a corporation, is only $2,065.24, while the amount he receipted for as secretary and treasurer is $6,000.
We adopt that as the law of this case. Therefore, it will be necessary that the testimony here adduced would be such as, in our judgment, would be necessary on the trial of Murray in the Court of Sessions on the charge of breach of trust with a fraudulent intention, for a verdict of guilty there. What is this offence under our criminal laws? We have no statute providing for a case of embezzlement. But in 1866 our criminal law was amended by this addition: “Any person committing a breach of trust with a fraudulent intent shall be held guilty of larceny.” In The State v. Shirer, 20 S. C., 394, this definition of the Circuit Judge was approved by this court: “A breach of trust is where personal property of. appreciable value, and of which larceny may be committed, is put into the possession of another; and when it is so put into his possession it becomes a trust, and while it so remains, if he conceives the purpose to convert that property to his own use, and does it with the intention to deprive the owner of the use of that property, then that is a breach of trust with a fraudulent intention.” In the case of The State v. Butler, 21 S. C., 354, Chief Justice Simpson said: “The act on the subject of breach of trust makes the of-fence larceny in general terms; and we think when it placed it under the general head of larceny, it partakes of all the incidents thereto, and is governed by the law applicable to larceny as one of the classes of crime, whether statutory or common law * * * Larceny at common law is defined to be the taking and carrying away of the personal goods of another with felonious intent.” The animus furandi must exist.
We have thus endeavored in our own way to cover the grounds of appeal here presented, and, from the foregoing directions, it will be seen that the decree must be modified in the particulars herein ordered.
It is the judgment of this court, that the decree of the Circuit CourAshall be modified on the principles herein announced, and in all other respects affirmed. Let the cause be remanded to the Circuit Court, with directions to carry into effect the modification herein provided.