260 F. 719 | 4th Cir. | 1918
Lead Opinion
The plaintiff in error will be called the defendant, the position he had below. For a number of years prior to August, 1915, he had been vice president of the First National Bank of Fairmont, W. Va., and one of its directors and large stockholders. He was its ranking officer, in regular daily attendance. The jury might well have found that its affairs had long been very largely under his control. It once had had, and still publicly claimed, a capital of $200,000, and a surplus of $100,000. The comptroller of the currency had made up his mind that the surplus, and much, if not, all the capital, had been lost. He was unwilling it should continue its business. In order to prevent serious damage to the interests of the community, its assets were taken over by another of the national banks of Fairmont. The latter undertook to pay its debts, in so doing being partly protected by an agreement with the other banking institutions of the place, by the terms of which any loss incurred should be apportioned among them and it. The amount to be apportioned will not fall short of a quarter of a million dollars, and may considerably exceed that sum. An official investigation naturally followed, and as the result two indictments, one of 39 and the other of 6 counts, were returned against the. defendant. By these he was charged with various false entries, misapplications, and embezzlement. By order of the court,' and against his protest, these indictments were consolidated. He was found guilty as to the fifth count of the second indictment, which charged the willful misapplication of $2,066.46 of the bank’s money with intent to injure and defraud it. He was acquitted on all the other counts.- He originally assigned 11 errors. Abandoning the fifth of the .series, he relies on the remaining 10. Tittle need be said as to most of therfi.'
“If a man takes funds of the bank from the hank’s cash account, for example, and puts them to his own or some one else’s use, that is misapplication of the funds at the bank, although he may not intend to embezzle, if he does it with intent. Abstraction implies not only a willful misapplication, but the actual taking of the funds from the bank, and the conversion of them to his own use and benefit, or to the benefit of another, with intent to defraud the bank. Now I think you will see, if. you will just bear in mind the words misapplication and abstraction, abstraction means taking out; misapplication, while it stays inside the bank.”
It is apparent to every one that the word “intent” as here used meant intent to injure or defraud. It is equally certain that every one present at the time so understood it. Immediately after he had used the language in question, he asked counsel whether they had any exceptions. If there had been any doubt in anybody’s mind as to the meaning of what he then said, his attention would have been at once called to the point now made.
On the 10th of July, two weeks and one day after making this agreement, a note for'$2,066.46, which was in fact, although not in form, his own, was presented to him for payment. The holders of said note were insistent on immediate satisfaction. He had no funds, or practically none, to his credit at the bank, and yet he paid the note out of the bank’s money. He left the note as cash with the bank. It was secured by a vendor’s lien on some real estate. Less than a month later, the terms of the agreement of June 25th not having been complied' with, the bank was, at the demand of the comptroller of the currency, taken over as already stated. In the course of liquidation of its assets, legal proceedings were taken to foreclose the vendor’s lien above referred to. As the result the property was sold, and nearly two years after the money was taken out of the bank it was in that way recovered.
There was no question that the defendant had misapplied the funds in question. He knew the bank was in desperate straits for money, and he had been instructed not to permit overdrafts. If Bacon v. U. S., 97 Fed. 35, 38 C. C. A. 37, is sound law, this transaction was an overdraft ; but if it was a loan, the conclusion would be the same. It is not claimed that defendant had any authority to make loans. He himself was in financial difficulties, and, being unable out of his own funds
“For a promotor of various enterprises to obtain the funds of a bank on 1he security of unmarketable bonds ot’ his own enterprises at the risk of the interests of the bank is not proper and legitimate banking, and the entries on the books of the bank as loans and investments do not conceal the fraud thus perpetrated upon the bank.”
And the Circuit Court of Appeals for the Third Circuit, in Lear v. U. S., 147 Fed. 359, 77 C. C. A. 537, has said:
“A reckless act, moreover, is always regarded, as the equivalent of a willful one, and that at least was here. The possibility of injury was apparent on the face of the transaction, notwithstanding which the interests of the institution of which he was the trusted head were put aside, and his own made paramount, in utter disregard of the outcome.”
Affirmed.
Dissenting Opinion
(dissenting). When this case was here in the first instance on appeal I concurred in the opinion of the court at that time. However, a further consideration of the questions involved impels me to the conclusion that the judgment of the court below should be reversed. The reasons upon which I base my conclusion may be briefly stated as follows:
(a) I am of the opinion that the court below erred in granting the motion of the government to consolidate the indictments.
(b) That the court erred in permitting the district attorney to argue to the jury that the bank had lost money on account of the conduct of the defendant, whereas it does not appear that the bank lost any money on account of the transaction for which defendant was indicted.
(c) As I have stated, the record shows that the hank did not lose a single dollar on account of any of the transactions of the defendant.
Therefore I am of the opinion that the court erred in refusing to grant the instruction referred to in the ninth bill of exception. The defendant was entitled to have this instruction submitted to the jury. It clearly raises the question as to whether it was shown by the evidence that the defendant committed the acts with which he is charged with intent “to injure or defraud the bank.”
Rehearing
On Rehearing.
Careful consideration has been given to all that at the rehearing was urged upon behalf of the defendant, hut the majority of the court adhere to the opinion handed down October 1, 1918, and to the conclusion therein reached.
Affirmed.