53 F. 634 | N.D. Iowa | 1892
(charging jury.) I congratulate you.' that your labors in this case are so nearly ended; and I desire to as-j sure you that the court heartily appreciates your prompt and inter-ested attendance, and the careful attention yon have given to the] evidence as it has been introduced before you during this lengthy trial. Thus far your conduct has abundantly justified the system of jurisprudence which has as one of its most valued elements the trial by jury. In every civilized land the right of any man, charged with crime, to a trial by jury, is held sacred. In this great nation of ours,' this sacred right is assured by the fundamental law of the land, our national constitution; and I hold it to be as much the duty of a good citizen to serve his country in time of peace, when summoned to act in the capacity of juror, as it is a good citizen’s duty to respond to her call when her safety and honor are imperiled by domestic violence, or her flag assailed by a foreign foe. So long as the intelligent citizenship of the nation, with á courage which dares rightly to decide, and an integrity which cannot be cajoled or corrupted from a true verdict, shall constitute the juries of our courts, so long may we confidently expect our courts shall he the protection of innocence and the terror of evil doers.
In the system of jurisprudence obtaining with ns, a trial, in cases like the one now on hearing, has a twofold division, each part having .its separate duty to perform. The court is charged with the duty of determining the law governing the case, and of superintending the admission of evidence upon which the facts involved are to he decided, while the jury is charged witir the duty of deciding the facts as the evidence shall enlighten them. You will thus observe that the jury is a most important arm of the law in the administration of our criminal jurisprudence, and that the efficiency of that jurisprudence depends no less on the faithful and honest action of the jury than upon the honest and intelligent action of the court. In
By the oaths you have taken, you are bound a true verdict in this case to render, on the evidence introduced before you, applying thereto the law as it shall be given you by the court. As a jury, you are to be no respecter of persons. Whether the defendant has Idgh social standing and influence and wealth, and be entrenched with powerful friends, or. possesses none of these desirable conditions, but, instead, be a man of low degree and acquainted with poverty, he is to receive at your hands the same honest, intelligent, courageous consideration, with reference to the facts proven. See to it, gentlemen, that as you expect to answer at the last great day, when the secrets of all hearts are made known, see to it that your consciences shall discharge you in this case; in the sincere and impartial performance of your duty, from the obligations of the oaths you have taken.
The court is no less bound to impartially administer the law. Every judge of a United States court, as he enters upon his office, is sworn thus to discharge his duties. Let me read to you what that oath is:
“I do solemnly swear that 1 will administer justice without respect to persons, aud do equal right to the poor and to the rich, and that I will faithfully and impartially discharge and perform all the duties devolving on me according to the best of my abilities and understanding, agreeably to the constitution and laws of the United States, so help me God.”
By this oath the judge is bound to see that justice is administered, and that the right prevails. I can say to you, gentlemen, without: reservation, that this has been my sole wish and desire in this trial, now so near its close.
The defendant, Rufus E. Graves, stands charged with having violated the law relating to his duty as president and director of a national banking association, viz. the Commercial National Bank of Dubuque, in that he made certain false entries in certain reports to the comptroller of the currency. In your investigations in this case, bear constantly in mind, gentlemen, that the defendant is not upon trial upon any charge of embezzling or misapplying funds of the bank, nor upon any charge of having by himself, or with others, plundered or wrecked the bank; and you cannot base your verdict herein upon any other charge than that set forth in the counts of the indictment submitted to you. The indictment confines this trial to
The national banking act is of comparatively recent enactment. The system of national banks grew out of the necessities of our nation during the war of the Rebellion.' At a period in that terrible and costly war when the armies of the' nation were in the field and its navies rode the waves, when revenue greatly in excess of that coming into the national treasury became absolutely necessary to the maintenance of our armed forces and of the government at home and abroad, —at a time when thé very existence of the nation, and thé suppression of the armed foés warring upon it and assailing our flag, seemed almost to depend on the power of the.government immediately to provide greatly enlarged financial resources, — the financial statesmen of the nation devised this plan, which, with subsequent amendments, has crystalized into the present national banking law. I but voice the general sentiment of every man who has carefully investigated the present national banking system when I state that it is one of the best, if not the best, banking system the human intellect has ever devised. It is rightly called a “national” banking law. Having its inception in the necessities of the nation, and its foundation in the statutes enacted by the national lawmaking power,- congress so broadly laid its foundation that it applies and extends to the farthest boundaries of the nation, and yet is- at the very door of‘any community desiring to avail itself of the benefits found in the system. :And congress, intending it should be national in extent, has placed ; it under national, or, as the term is sometimes used, federal, charter and federal supervision; so that this system is- under federal, as distinguished from, state, supervision. Upon the. courts of the United States, and not upon the’ courts of the several states, is conferred the duty and power of investigating and punishing crimes or violations of the provisions of this law. '
Anticipating that in almost every settled part of the nation these national banking associations would spring up, as their security and desirability should be made manifest, congress carefully surrounded thése associations by every barrier against dishonesty, fraud, and corruption which the ingenuity of its members could devise; for it was apparent that into the treasuries of these national banks would be deposited, not only the surplus of the capitalist, but as well the haid-earned Wage of labor. Disaster befalling one of these banks must of necessity bring close in its train widespread ruin in the community; business men and business enterprises whose financial interests were involved in these banks would go down with the bank; and the savings of years of self-denial, the dependence of the widow and the support of the orphan, would be swept away in the common
In addition to the financial responsibility imposed by the statute upon the individual stockholders, which in general may be stated to he substantially to the extent of the par value of the shares held by them, outside of and beyond the actual value of their interest iu the bank, the officers of the hank are laid under stringent a,nd .sharp criminal responsibility. Upon the directors the statute confers the management and control of the bank, and the law wisely holds them to a close and careful attention to them* duty. Every director, upon entering upon his office, is reminded of his duties by the oath he is compelled to take and subscribe, and his term of office is hut for the banking year. Thus in. each year the directors are brought before the stockholders to an annual responsibility, and, though re-elected, the oath must he taken at each election anew. This oath — and É give it in pari, that it may he seen how powerful is this annual reminder — is in substance as follows: That he will, so far as the duty as director devolves upon him, diligently and honestly administer the affairs of the hank of which he has been elected a director, and will not knowingly violate, or willingly permit to be violated, any of tbe provisions of the law relating to national banks. And this oath is forwarded to the comptroller of the currency, and hied and preserved in his office, — an oath which, if observed in its letter and spirit, will make reasonably certain the permanent prosperity of the bank, and assure the safety and security of all who shall confide their means to the hank’s keeping.
The comptroller of the currency is charged with the general supervision of the hank, and he is clothed with plenary power and authority over it, and over its officers and directors; and it is his imperative duty, whenever he shall find a hank persistently following such plans, or conducting itself in such manner, as shall imperil the safety of those interested therein or the security of the hank’s depositors, — ■ the statute makes it his imperative duty, — to wind up such hank, and preserve for those entitled thereto whatever value may belong to such hank. Accordingly, the law provides that at least five times during the year, and on dates that may he fixed by the comptroller, every national bank shall make to the comptroller accurate and truthful reports of the condition of the bank, exhibiting in detail and under apjiropriate heads the resources and liabilities of the bank, in such form as he shall prescribe. These reports must he verified by the oath of the president, or cashier of the bank, and must be attested as being correct by the signatures of at least three
The records of this bank in evidence, as the samó have at different times been referred to in the course of the trial, have shown to you the fact that at the close of each day’s business the books of the bank are practically balanced, and each account therein closed for the day, and all entries therein carried out into such footings or statements as that, upon a moment’s inspection, a person familiar with banking methods can give the exact condition of any depositor’s account, or the exact condition of any item which has entered into the business of the bank, on that or any former day. You have seen the president of the bank and its cashier thus, without hestitation, turn in your presence to its records whenever a question relating thereto has been asked, and give you the condition as carried on these books of any discount or depositor’s account or the like, at any date inquired after, whether the date was that of any of the reports introduced in evidence, or a date years prior thereto. Now it is this very matter I have been considering which gives to these reports so made to the comptroller their value, and enables him, when these reports are accurately and truthfully made, to determine therefrom, as he might have determined from a personal inspection of the books of the bank, the general condition of the bank, and whether it is apparently safe and secure to those dealing with it, and whether it is under conservative, prudent, and safe management.
The statute further provides, for the purpose of giving information to those specialty interested and the public generally, that; these reports shall be published in the same general form in which they are made and forwarded to the comptroller; and thus it is possible for all who examine these published reports to have general knowledge of the condition of the bank and on the same points made known to the comptroller. These suggestions emphasize the wisdom of the law in compelling truthful and accurate reports from the bank. If the accounts are not truthful and accurate, — in other words, using a phrase which has come into quite general use and common understanding, if these accounts, as borne on the books of the bank, are “doctored,” and the condition of the bank as to the daily balances and footings are so changed Avhen entered into these reports as that they
The statute, in requiring that these reports shall he truthful, does not require any difficult task of the bank officials. A substantial synopsis of the,aggregates or footings as contained in the hooks of the hank at tin» close of any day’s business is easily made; and an inspection of the books in evidence, and a comparison of them with the printed part of the reports which have been introduced before you, will show that the hooks of this hank were kept in substantial accord with the general tenor of the demands made by the comptroller for information, and that, in Hie more material features of these reports, the total footings on any date called for could have been copied from the books of the bank right into these reports, and thus the accurate and truthful condition of the hank, as shown by its hooks, would in these points be in possession of the comptroller and all persons interested. So important does the law regard the necessity of these reports being accurate and truthful that section 5201) of the Eevised Statutes of the linked States declares that “every president, director, cashier, teller, clerk, or agent of any such hanking association, * * who makes any false entry in any * * * report * * of the association, with intent * * * to injure or defraud the association, or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent appointed to examine the "affairs of any such association, * * * shall he deemed guilty of a misdemeanor,” and punishment is provided accordingly. Another section of the law provides that the comptroller shall with the approval of the secretary of the treasury, and as often as shall he deemed necessary, appoint suitable persons to make examinations of the affairs of the national banks; and these examiners are empowered to make thorough examination into the affairs of the hank, and to examine hank officials upon their oaths, and report in detail to the comptroller the condition of the bank examined.
The indictment in this case, as originally presented, contained 16 counts, but the court has stricken out some of the counts, and now strikes out all the counts except the 4th, 5th, 7th, 8th, 9th, and 10th counts. You will therefore understand, gentlemen, that all the counts of said indictment have been and now are withdrawn from your consideration, except the six counts above specifically named, and yon will confine your deliberations to the said six counts, and will consider no others. I will now proceed to state to you what these six counts charge against defendant, as to which counts, and no other counts, you are to determine by your verdict the guilt or innocence of defendant.
The fourth count charges that on the 5th day of August, 1887, the defendant was president of and a director of the Commercial National Bank of Dubuque, which bank was at that date a banking association
The fifth count charges that defendant, in said report at close of the day’s business of August 1, 1887, of said bank, made therein a certain false entry, wherein he stated that on said August 1, 1887, the liabilities to said bank of its directors (individual or firm) as payers were $65,000, whereas in truth and in fact said liability to said bank of said directors was many thousands of dollars greater than as stated in said entry; that said defendant well knew said entry to be false, and made said entry with intent to deceive and defraud, as I have stated same in regard to said fourth count.
The ninth count charges that defendant, in said report to comptroller at close of the day’s business of August 1, 1887, made a certain false entry, wherein he stated that the loans and discounts held and owned by said bank aggregated the sum of $551,048.60, whereas in truth and in fact the aggregate of loans and discounts held and owned by said bank at close of business on said August 1, 1887, was many thousands of dollars less than said sum in said report stated, as defendant well knew; and that defendant made said false entry with intent to deceive and to defraud, as above stated as to fourth count.
’ The seventh count charges that on October 10, 1887, the defendant then being the president of and a director in said bank, in a report to said comptroller of the condition of said bank at the close of business upon October 5, 1887, made a certain false entry, viz. that he therein stated the overdrafts due to said bank aggregated the sum of $5,344.60, whereas in truth and fact at said time the overdrafts due the bank aggregated a sum by many thousands of dollars larger than as so stated, as defendant then well knew, and that defendant made said false entry with intent to deceive and to defraud, as above stated as to fourth count.
The eighth count charges that in said report to said comptroller of the condition of said bank at close of business on October 5, 1887, defendant made a certain false entry, viz. that he therein stated liabilities of directors (individual and firm) as payers to said bank were $49,867.40, whereas in truth and in fact, as defendant well knew, said'liabilities of directors, (individual and firm,) as payers on said date, were many thousands of dollars larger than the sum so stated
The tenth count charges that in said report to said comptroller of the condition of said bank at close of business upon October 5,1887, said defendant made a certain false entry therein, viz. that he therein stated the loans and discounts held and owned by said bank aggregated the sum of $491,5(52.85, whereas in truth and in fact the aggregate of the loans and discounts so at said date held and owned by said bank was many thousands of dollars less than said sum by defendant so stated, as defendant then well knew; and that defendant made said false entry with intent to deceive and to defraud, as staled above as to said fourth count.
Brought down into small compass and in a form easily understood, defendant is charged with having made false entries with regard to •the condition of said bank, as to its loans and discounts, as to its overdrafts, and to liabilities due it from its directors (individual and firm) as payers, in each of the reports as to August 1, 1887, and as to October 5, 1887. The jury, as they may find from the evidence, can find the defendant guilty as to all of these six counts, or not guilty as to all of these six counts, or guilty as to one or more of these six counts, and not guilty as to the remaining counts.
To this indictment- the defendant pleads not guilty; and this puts 0 in issue every material averment necessary to a conviction. The defendant is by law presumed to be innocent, — that is, he starts into this trial with the presumption of innocence in his favor; and before he can be convicted he must be proven to be guilty beyond a reasonable doubt. And if he is not so proven, you must acquit Mm.
With regard to the crime charged in the various counts submitted to you in the indictment, you will observe that there must be proven herein the following points:
(1) That the Commercial National Bank of Dubuque was at the dates named in the various counts submitted to you a banking association, organized and existing under the statutes of congress providing for a national hanking system.
(2) That defendant, Rufus E. Graves, at the dates named in said counts, was the president of said bank and a director therein.
(3) That a report of the condition of said bank was, on one or both of the dates named in said counts, made to the comptroller of the currency.
(4) That sold defendant, being at the time the president of and a director of said bank, did make in one or more of said reporte to the comptroller a false entry set forth in some one of said counts in said indictment.
(5) That said defendant so made such false entry with the intent to deceive any agent then appointed, or thereafter to be appointed, to examine the "condition of said bank, or to deceive some one or more officers of said bank, or with the intent to defraud the said bank, or some other corporation, firm, or person.
And, before the defendant can be found guilty, each of these points must be proven. If any one of them is not proven, the government has not fulfdled the requirements of the law as to proving guilt. In
There remain, therefore, for your determination in tlfis case, but two disputed points, upon determination of which depends the verdict you are to render herein; and these points are:
(1) As to the entries, or any of them, with which defendant stands charged, being false entries.
, (2) (And if you find that they or any of them are false,) as to their having been made by defendant with intent either — First, to deceive any agent then appointed, or thereafter to be appointed, to examine the condition of said bank, or to deceive some one or more officers of said bank; or, second, to defraud said bank, or some other corporation, firm, or person.
These two remaining disputed points I will consider in the order just named. And first as to the false entry: I have to say to you that the term “false entry,” as used in this statute, when taken with its connecting words means more than simply an untrue or incorrect . entry; for congress did not thereby intend a-mere mistake as to the entry. Congress did not intend to punish a bank director or bank fficial who inadvertently, through mistake, or perhaps negligently, i %de in a report an entry which, though in fact incorrect or. false, w, 1 believed by such bank officer to be true. Humanity is fallible. Wt re all of us frequently making mistakes. An error might occur by \ f placing of figures inadvertently in the wrong column, or a foot! - of the columns entered might be wrong and in fact false, and be /, ntered, without being known to the official, and without his ir jndi g thereby to make a false entry. A mistake thus honestly ade wnl not expose the maker to punishment under this law. But ae false entry contemplated in this statute is an entry known to the maker to be untrue and false, and by him intentionally entered while so knowing its false and untrue nature.
If, then, you find from the evidence that in either report, that is, the report of the bank’s condition on August 1, 1887,- or on October 5, 1887, which reports have been introduced in evidence, the entry as to loans and discounts, or as to liabilities of directors (individual or firm) as payers, or as to overdrafts, when therein made by defendant, was untrue and false, and was known to him to be untrue and
The defendant has testified before you with relation to the entries in said reports. The books of the hank relating to the subjects of loans and discounts are in evidence before you. The defendant, has testified as to what the books of the bank showed upon these points, as they were then being kept by the hank, and that he knew at the time lie made the entries in the reports what the showing was upon these books, as to both loans and discounts and overdrafts. He has stated to you the aggregate of loans and discounts, as shown under such heading on the bank’s books at the close of the day’s business to which these reports relate, and has stated that he did not enter into said reports, as the aggregate of loans and discounts of the bank on such day, said aggregate loans and discounts as then shown on said bank books. As an illustration of the testimony of defendant, (for defendant has said the same plan was pursued as to the entries as to loans and discounts in each report,) take his testimony as to loans and discounts as entered in the report as to the condition of the bank at the close of its business upon August 1, 1887) The “Loans and Discounts” account, as kept under that heading on the books of the hank, defendant states was at the close of August 1, 1887, the aggregate sum of $490,133.78. The entry made by defendant in the report to the comptroller state the aggregate of loans and discounts at the close of business on that day to be $551,048.60,— a difference of about $60,000 larger, as reported to the comptroller, than was then borne on the hooks of the bank. The defendant has testified before you bow this entry as stated in the report was obtained, and that the items which, as he says, constitute the aggregate report to the comptroller, are as follows:
LiOans and discounts, as shown on the books of the bank under that
heading................................................... 8490,133 78
Suspended loans carried under that heading on the books of the
bank............................................ 10,000 00
Investment fund or account.................................... 75,449 82
And to this he has added a portion of the overdrawn accounts of individual depositors of the bank, in an aggregate of......... 20,465 00
Making a total of.......'.................................. $596,048 60
Then he deducted, he says, (from this aggregate of what he claims as loans and discounts,) what was carried on the hooks of the , bank, under the heading oí “Contingent Fund,” in an aggregate of......................................................... 45,000 00
This deduction, he says, produced the amount of the entry of loans and discounts, as contained in the report to the comptroller, viz.................................................. $551,048 60
The question presented for your consideration as to this entry in said report is, is (his entry of loans and discounts as contained in
The form of report prescribed by the comptroller as shown in the printed portion of the report of , August 1, 1887, as introduced in evidence, does not require that the bank officials shall enter in said report the items called for therein, under the same headings given on the books of the bank. The prescribed form, you will notice, states '' in its caption that it is a report of the “condition of the bank,” and does not pretend to be an exact copy or transcript of the books of the bank under the several headings contained in the prescribed form. Therefore the defendant was not compelled to enter, on the form prescribed for the report, the exact aggregates carried under such several headings on the books of the bank, provided the aggregates entered in said report truthfully state the condition of the bank at the close of the said day’s business with regard to the headings under which the entries are made in the report. Let me illustrate this point: This bank appears to have carried on their books from day to day certain loans and discounts under the heading of “Suspended Loans;” and the testimony tends to show that these suspended loans had been theretofore carried on the books under the heading of “Loans and ■ Discounts,” but had been withdrawn therefrom as objectionable paper or loans having- an improbability of payment, and were temporarily carried under the .heading of “Suspended Loans,” awaiting the action or decision of the board of directors as to these suspended loans being withdrawn or charged off from the character of loans, and entered up as a loss on the profit and loss account. I do not understand the government seriously disputes the correctness of these suspended loans being placed in and made a part of the loans and discounts entry in the report to the comptroller; for the explanation given would still give these suspended loans the character of loans and discounts, and as being carried on the books of the bank in good faith as a part of their actual loans and discounts, though, as I understand, temporarily, and for the convenience of the bank, entered on its books under another heading, viz. “Suspended Loans.” Anri therefore when defendant added the aggregate of said suspended loans account to the aggregate of loans and discount account, as shown on the books, defendant in so doing did not make a false entry. He believed them to be loans and discounts, and he was justified in so believing, and in good faith so reported them, and under the circumstances did not as to that particular make a false entry. The entry of loans and discounts in reports to the comptroller does not guaranty the solvency of the makers of the paper, but it is a statement that in truth and in fact, at the date named in the report, the bank actually held and owned loans and discounts to the aggregate therein reported.
The evidence does not disclose that any particular method or system of book keeping is demanded of a national bank. It is not required to conform its headings of the various accounts to any prescribed names, nor to the names stated in the form of .report prescribed by the comptroller; and therefore when a report is called for, if the person making it enters under the headings in the pre
Did defendant make a false entry as to the $75,449.82 which he has termed “investment fund,” when he included that in his entry of loans and discounts in this repoi-t to the comptroller? The items constituting (his aggregate of $75,449.82 have been placed in evidence by defendant. It is shown without controversy that some $60,000 of the bonds of the Iowa Iron Works Company of Dubuque entered into this aggregate called “investment fund,” and that these bonds belonged to the bank and were secured by mortgage. You have hoard the evidence given, as tending to show why the amount of these bonds were by defendant entered in the reports' to the comptroller as being loans and discounts held by the hank. The form prescribed for the report, as it is in evidence, has a heaxiing wherein are to he entered, after entry to be made of United States bonds, “Other Stocks, Bonds, and Mortgages, (market value, see Schedule.)” It would appear that reasonably and naturally all bonds owned by the hank should rightfully have been entered under this appropriate beading. The question arises, wbv did not defendant enter these $60,000 bonds under that heading? Defendant has introduced evidence on this point, and you are to consider and determine whether these bonds, if correctly entered, would have been, entered in the report under the heading of “Other (than U. S.) Stocks, Bonds, and Mortgages,” or as the same were actually entered, under the heaxiing of “Loans and Discounts;” and if a correct, entry would have placed them under the heading of “Other Stocks, Bonds,” etc., then inquire whether the evidence satisfies you of good faith and honest, action of defendant in entering such bonds, when reporting to the comptroller, as loans and. discounts, or whether, for the purpose of swelling or improperly enlarging his loans and discounts entry to the comptroller, defendant, knowing they properly should have been entered under another heading, intentionally entered them in such report raider the heading* of “Loans and Discounts.” Under all the facts proven, yon are to decide whether the claim of the government is correct, that the defendant, in entering in the report to the comptroller these $60,000 bonds as loans and discounts, made a “false entry,” within the meaning of that term as I have hereinbefore defined it.
And in considering this matter you may notice that on the first or outside page of this report appears the heading “Other Stocks, Bonds, and Mortgages,” and you may further notice that these $60,-000 Iowa Iron Works Company bonds are not there entered, although certain other bonds to the amount of $50,000 are entered under that heading; and there is also entered under that haading of “Other Stocks, Bonds,” etc., $8,500 of stock of said Iowa Iron Works Company. Ought these $60,000 to have been entered in this report under heading “Other (than U. S.) Stocks, Bonds, and Mortgages?” If they should have been entered there, and were not there entered, but were entered wrongly under “Loans and Discounts,” is any reason
The further question remains as to this loans and discounts entry in the report to the comptroller, did the defendant make a false entry in such report when he entered as loans and discounts the further sum of $20,465, which he has testified before you is composed of part of the overdrafts that day shown by the books of the bank to exist in the accounts of various depositors whose names he has given you? It will be convenient to consider this question in connection with the further charge in the indictment, with reference to said report of August 1, 1887, that defendant made a false entry in said report as to overdrafts. The proof shows that the amount of overdrafts entered in said report was the aggregate of $2,948.88, and defendant has testified before you that the aggregate overdrafts upon that day, as shown by the books of the bank, was the sum of $23,413.38; so that the books of the bank at the close of business on August 1,1887, show an aggregate of overdrafts in excess of that entered in said report of $20,465; in other words, while the books of the bank, in the progress of their regular keeping from day to day, showed the accounts of its depositors to be then overdrawn in the aggregate of $23,413.38, the entry in the report to the comptroller as to the condition of overdrafts that day was $20,465 less than shown by the books, and the entry in such report was the sum of $2,948.38. You will have noticed that this difference ($20,-465) is the exact amount which defendant testifies he entered from or took from the overdrawn accounts of the books of the bank, and put into the entry in the report as to loans and discounts, and the matter may thus be stated. If defendant rightly did this, — that is, if in so doing he made a report to the comptroller of the true condition of the bank, — he did not then make a false entry in these particulars; but if the entry in reporting the overdraft, that day as $2,948.38 instead of $23,433.38 was not a truthful entry, then it would naturally
Now, there is no difficulty in understanding what an overdraft is. There is no conflict iu the testimony on this point. The hooks of the bank, as testified to by defendant and by all the witnesses, and as themselves in evidence before you, show that a,n overdraft occurs whenever a depositor overdraws the amount of his deposits. I deposit in a hank a thousand dollars, subject to be checked out. I commence to check it out; and, whenever the amount of my checks paid by the hank exceed the amount of the funds I have deposited, an overdraft occurs in my account, and such overdraft is the amount the bank has thus paid, over and beyond the amount I have deposited.
Where, then, in the report to the comptroller should these overdrafts appear? You will find, upon looking at ihe report made to the comptroller, that if contains a heading called “Overdrafts.” This heading is “Overdrafts,” — plainly and simply, and without more,“Overdraffs.” This is the form the comptroller has prescribed, and which, it was the duly of the defendant to follow, and to enter correctly and truthfully, whenever he made an entry in said report with regard to the condition, of the bank as to overdrafts. Counsel for defendant have argued to you that an overdraft is in fact a loan, and that therefore the defendant was justified in including overdrafts in loans and discounts. But the comptroller demanded that the hank should report overdrafts in one place in the report, as well as loans in another place. Defendant assumed to report overdrafts. Did he make a true entry thereof? No explanation on the report advises the comptroller that the entry as to overdrafts is an impartial or incomplete entry as to overdrafts actually existing at the time the report assumed to give them. There is no separate heading of “Overdrafts Arranged for” in the report.
Let us for a moment recur to a point I have heretofore discussed. What is the object of these reports to the comptroller? Unquestionably to advise him as to the condition and method of management of ihe bank. Why are these reports required to be published in the public prinfs in the community where ihe bank does business? Without doubt, to afford information to the depositors, other hanks, and public generally of the condition of the hank, and the methods pursued in its management. Hence the purpose and manifest wisdom of congress in requiring a true report of the condition of the bank. Else a bank tottering on the edge of insolvency, or already insolvent, and actually in a wrecked condition, and unreliable and unsafe in its method of management, would, by a law which had in view the safety of the community, be by that law afforded most ready means of deceiving the community, whose suspicions, if aroused, would by these false reports he lulled into repose, and the bank thereby enabled the more completely to pursue any scheme of bank wrecking or robbery upon which it had entered. Now, what
In other words, on that day this bank, with a capital of $100,000, had overdrafts it was carrying for its depositors of well nigh 50 per cent, in excess of its capital. Can you doubt, gentlemen, that the judgment of the comptroller would have been different as to this bank’s condition and as to its management had he found the sworn report from this bank showing within a few dollars of $150,000 overdrafts, from what it was when he found overdrafts reported as a trifle over $5,000? Had this immense aggregate of overdrafts been made known to the comptroller, how long think you he would have permitted this bank to have continued business? In the community where these reports were published, have you any doubt, gentlemen, as to whether those dealing with this bank, intrusting their funds to its keeping and management, would have felt differently had they known that, instead of the $5,000 published .in its report, the books of the bank actually contained overdrafts of about $150,000, or nearly 30 times greater than the amount published as true, and exceeding its capital stock by $50,000? How long do you think the country banks having deposits in this bank would have permitted these deposits to remain had they known its overdrafts aggregated $150,000? But, as bearing on this matter, consider the further statement of the defendant that this $145,000 (carried on its books, but not reported, as overdrafts) was, in the report forwarded to the comptroller and published in the papers of this city, carried into and reported as a part of its loans and discounts, thereby swelling the aggregate of loans and discounts over $145,000. And now put these two matters together. If this community had known that the loans and discounts statement, as published, included and was swelled by an addition thereto of $145,000 of overdrafts, and that the overdraft account as published was $145,000 less than the overdrafts as shown by and actually being carried on the books of the bank, have you any doubt that the depositors and public generally would have viewed the bank, believed its condition, and regarded its management in a very different light from the opinions on this point held and experienced when they read the report as actually made? This illustration, apparently an extreme one, but one proved without contradiction by the testimony of the defendant to have actually occurred, and one
Counsel for defendant; have argued before you that it makes no difference if overdrafts are entered in loans and discounts, for they are on the same side of the report, and are resources. But the very object of the comptroller in dividing np the resources is that he may thereby gain a knowledge as to what sort of resources the hank has; and to put overdrafts a,s loans and discounts, or as cash, because loans and discounts and cash are on the same side, to wit, aro resources, is to report to the comptroller a state or condition of the bank not justified by this reason, according to the hooks of tho bank.
Another matter bearing on the point under discussion demands your consideration. A. letter has been introduced in evidence from the comptroller’s office dated July 1, 1887, and which has been read before yon. In this letter, under date of July 1, 1887, the comptroller notifies defendant and the other directors of the hank, among other matters complained of by him, that “the overdrafts are in large amounts, and some of them having been running for a, long timi‘.” ATow, the report of the hank as to its condition upon May 13, 1887, in its entry as to overdrafts, shows to the comptroller overdrafts existing to the amount of $7,810.23. Can you believe that this is the “large amount of overdrafts’.’ to which the comptroller refers? Or docs he refer to the actual amount of overdrafts as found on the hooks D.v Examiner Hi one, and by Mm in June reported to the comptroller? The evidence of the defendant and the books of the hank show that on the date of that report the bank overdrafts were actually $18,009.45. Is it not probable it is this amount, almost one fifth the capital stock of the bank, to which the comptroller refers as large amount of overdrafts? The report of the condition of the bank at the close of its business on August 1, 1887, was a month or so after this letter of the comptroller had been received by the directors of the hank. Did that letter of the comptroller influence the method of defendant in making np his report of August 1, 1887? in his letter the comptroller had pointedly said: “I fear you do not realizo the responsibility resting upon the directors iu the management of a national bank. Should the time come for the enforcement of the law under section 5239, Rev. St U. S., it will he enforced to the fullest extent.”
What do the hooks of the hank and tho testimony of defendant show were the actual overdrafts borne on such hooks August 1, 1887 ? The aggregate overdrafts are $23,413,58, an amount $15,603.62 greater than the overdrafts reported in the last bank report introduced, which preceded tMs letter of the comptroller, and $5,404.13 larger than was actually earned on the hooks of the bank at the date when the report of May 13th was made Now, the comptroller, under threat of the penalty of enforcing the law to the fullest extent, among other matters called the attention of the defendant and the other directors to the large amount of overdrafts and the long
Coming back to the question I was considering, as to the undisputed fact that over $20,000 Of that which on the books of the bank was on August 1, 1887, carried as overdrafts were not entered as overdrafts by defendant in his said report to the comptroller August 1, 1887, but were by bim entered into said report as loans and discounts, it is for you to say, under all the evidence, whether, when defendant made the entries in these matters in said report, he made a “false entry,” within the meaning of that term as I have defined it.
Testimony was offered by defendant as affecting this manner of dealing with overdrafts, in which offer it was attempted to show that other banks had been doing and were at the time pursuing in their reports to the comptroller the same methods claimed to have been pursued by this bank; but the court refused to permit the introduction of the evidence thus offered for this purpose. The court could not permit the practice of any other bank official in this regard to ba considered by the jury as justification to defendant, in his action. Two wrongs never make a right. Defendant must be judged by you on this point by the application of the law to the facts proven in this case. You will not, therefore, consider, as making right any wrong entry made by him, any testimony with reference to what any other bank did or may have done in this matter. But the court permitted defendant to show his knowledge as to what other banks had thus done, for the purpose of possibly bearing on the question whether, by what defendant entered as to overdrafts, the defendant intended to defraud or deceive any of the parties named in the indictment; and any knowledge defendant had on this point, as to the said practice of any other bank, may thus be considered by you when you come to consider the question of defendant’s intent in this matter, and no further.
Defendant testified that in obtaining the aggregate reported as loans and discounts in his reports as on August 1, 1887, and October 5, 1887, he deducted, from what would otherwise have been reported as loans and discounts, the sum of $45,000, which he calls a “Contingent Fund.” In so doing did he make his report truthful, or did he make the loans and discounts entry incorrect or untrue? From what source did this $45,000 come? What caused it to be
All this occurred before the August report was made, and there appears no dispute in the evidence concerning it; and it is shown that at the time of this August report some $30,000 of this $45,000 yet remained upon the books of the bank as paper discounted by the bank. Can there be any serious question that it should have been reported to the comptroller, and included in the loans and discounts reported, and that, when this $30,000 (of the $45,000) was subtracted from what would otherwise have been the aggregate loans and discounts, the report was thereby made untrue and incorrect?
But, again, the evidence without contradiction showed that at the time of this August report $15,000 of this $45,000 had been paid in cash by the directors, and no loan and discount paper for it was held by the bank. Why, then, was this $15,000, in addition to the $30,000,
Defendant claims, and has offered some testimony on that theory, that this money and notes (this $45,000) did not belong to the bank either in August or October, 1887, and in fact they did not belong to the bank until depreciated or objectionable paper to that extent had been charged off by the board of directors, and that this was not done until after October, 1887. But the order of the comptroller demanding that $45,000 be raised neither contained nor referred to any such condition. That amount was to be unconditionally raised, and unconditionally paid into the bank. The penalty for not so doing was the closing of the bank. The letter, in the handwriting of the defendant, and signed by him and his associate directors, and sent to the comptroller, informed the comptroller that the $45,000 had been paid into the bank. The letter neither stated nor made reference to any condition such as now claimed by defendant. Was the letter thus written ¡with intent to deceive the comptroller? There is no ground shown for such a presumption, but rather that the letter was written to 'inform the comptroller what it states to him, and was signed by defendant at the time when he meant and intended the statement he ¡then signed; and he cannot successfully now urge a condition inconsistent with his letter, and which, if stated in that letter, it is but •'reasonable to believe would have resulted in what the comptroller ¡threatened,- — the closing of the bank doors. But the question still ¡remains with reference to this point for the jury to determine, did defendant in what he did with, reference to the deducting of this $45,000 from loans and discounts, and entering in the report to the 'comptroller as correct and true the amount of loans and discounts as thus obtained, — did defendant make a false entry, within the meaning of this term as I have defined it?
I come now to the charge that in the report of August 1, 1887, defendant made a false entry with reference to the liabilities of the directors. The government contends that this entry is too small by many thousands of dollars. The provisions of law wisely authorized the requirement that the bank shall report the liability of its directors to it. A bank rarely fails (and with reasonable certainty as to the answer I may apeal to your knowledge, and as a matter of common observation among men, that a bank is scarcely ever, if ever, wrecked) by loans to parties not members of its board of management. Hence the wisdom of the requirement that the report state the liability of directors. The bank directors must each be the owners of ten shares of stock, and there must be at least five directors. Frequently, if hot ordinarily, some of the directors are larger stockholders; so that the law anid the public can generally rely upon the interested directors seeing that the bank is not wrecked by appropriation, by parties out
The testimony of defendant is that on August 1,1887, the bank was the owner of over $18,000 of paper drawn by L. D. Randall & Go.; that L. D. Randall was at that date a director in this bank, and, when this paptsr was discounted, was a member of the firm of L. D. Randall & Co.; but that.in this report to the comptroller he did not enter as a liability of director this said amount of L. D. Randall & Co. paper, because, as he thought, L. D. Randall was not liable as payer. If he so thought at that time, he erred in judgment. You are instructed that in this respect the entry as to liabilities of directors is, according to defendant’s evidence, not correct and true, and that defendant should have entered that amount under the heading of “Liabilities of Directors.” As to whether it is, as made by defendant, a “false entry,” within the meaning of the term as I have defined it, you must decide under all the facts proven. Here, also, yon may pertinently consider what, if any, influence upon the method which defendant practiced as to the Randall & Co. paper in report of August 1,1887, the letter of the conipiroller had.
In the last report in evidence preceding this letter from the comptroller there had been reported, as liabilities of directors as payers, the aggregate of $53,867.08. This was of date of May 13, 1887. The comptroller’s letter, as I have stated, is'July 1, 1887. In this letter the comptroller calls attention, by special reference, to the fact that certain loans he names exceeded the limit prescribed by law, and among them the comptroller named the loans to L. D. Randall of $19,049. (At this tíme L. D. Randall was a director in the bank.) The comptroller notifies defendant and the other directors of the bank as follows: “Attention is again called to the unlawful use of the bank’s funds by its officers and directors;” and he adds: “I must ask that these loans be reduced immediately to within the limit,” etc. Within about a month after the receipt of this letter another report was demanded by the comptroller. At the time of this last called for report of August 1, 1887, the bank was the holder of paper drawn by L. D. Randall & Co. for the amount of $18,000, and of L. D. Randall of about $5,000, in all exceeding the sum of $23,000, as paper on which said L. D. Randall, then a director, was liable as payer. The testimony of the defendant is to the effect that he did not enter this paper oil which L. D. Randall was liable as a payer in the liabilities of directors as the same is entered in the report of August 1,1887, and as of October 5,1887. In this respect the entry as to liabilities of directors is in each of said reports incorrect and'untrue; and it is for the jury to say, from all the facts and circumstances proven, whether defendant made, with reference thereto, in said reports, a “false entry,” within the meaning of said term as I have defined it to them in the preceding instructions. The defendant was permitted to state the reason why, as
As to one other piece of paper, purporting to be a draft made by the Iowa City. Gaslight Company by J. K. Graves, president, in favor of J. K. Graves, and held by the bank for about $5,700, defendant testifies that he did not enter this paper among liabilities of directors. Evidence has been admitted, namely, the sworn testimony of the defendant, tending to show that at the time this draft was drawn, or the orignal draft of the same import, of which this was one of the renewals, defendant knew that this paper, drawn by said J. K. Graves, who was then a director of the barde and a brother of defendant, and nominally drawn by him as president of the gas company, was in fact the paper of J. K. Graves, and so known to the defendant. The government contends that this draft was but a ruse or device whereby the said J. K. Graves was to be permitted to further increase his paper in the bank, under attempted color of a draft by said gas company. If the jury find from the facts proven that, at the time this paper was drawn and taken by the bank, said J. K. Graves had no authority to sign said paper with the name of said gas company as by him as its said president, and that the paper was in fact said J. K. Graves’ paper and discounted for J. K. Graves’ personal benefit, and that all these facts were at the time fully known to said defendant, and, so knowing, said defendant intentionally did not enter the same among liabilities of directors, the jury will determine from all the facts proven whether said defendant made a false entry in said renort of liabilities of directors with reference to this matter, within the meaning of the term “false entry” as heretofore defined to them.
I have considered in some detail the items entering into the report of August 1, 1887. Many of the same items, and much of the same method of making the report, enter into the report of October 5,1887. I shall not attempt to consider the several items of the October report. The jury may take the method of treatment I have given as to the August report, and themselves apply the same substantial method so far as properly applicable to the October report; and when they have considered all the evidence relating to the charges of false entries in said October report, and applying thereto the law as I have herein given it, the jury will deteimine whether the defendant made any “false entry” (as I have heretofore defined it) in said October report, with regard to loans and discounts or overdrafts or liabilities of directors, as stated in the several counts relating thereto.
If the jury do not find, in any one of the two reports above described, that defendant made any false entry charged in the indictment as the same is submitted to you, and as the term “false entry” has been hereinbefore described and defined, you will proceed no further in your investigations; for the making of such false entry therein is, as heretofore stated, essential to the finding of defendant’s guilt. If
It is a sound and wise principle of law that a man shall he held to intend the legitimate consequences! of his acts; that is, that he intended that which is the natural and necessary result of his act, freely and knowingly done. If a man, knowing a coin is counterfeit, passes that coin upon another as genuine, he will not he allowed to say that he passed it with innocent intent. From his act of intentionally passing the coin as genuine, when he knows it to he counterfeit, the law presumes and holds him to the presumption that he passed it with guilty intent. If a man brings to me a horse, and proposes to sell it to me, and affirms to me that he owns the horse, and that his ownership is full and complete, when in fact he knows the horse belongs to another, and that he lias not the least right or interest as owner in said horse, and I, relying on his statement, purchase the horse of him, he will not be heard to claim that he sold the horse to me with innocent intent, hut the law stamps his act as done with guilty intent, m done with an intent to deceive me, and with fraudulent and false pretenses. In other words, wrongful acts knowingly and intentionally committed can neither be justified nor excused on the ground of innocent intent. The color of the act -determines the complexion of the intent.
If a director of a national hank, in a report to the comptroller of the condition of his hank, makes ail entry which is false, which does not contain or state the truth with regard to the condition of the bank upon the date named in this report, and such entry relates to a material matter, and such director, at the time he made such false entry, knew it was false and calculated to deceive, and that it did not give a true and correct statement of said bank’s condition at the time with respect to such entry, in such case the law will not permit him to say that he made such false entry with innocent intent, and not expecting to deceive any one thereby. If such a director willfully puts up a report designed to allay any suspicion then existing, designed to induce faith and trust in his institution, and it is proven that the entries in that report are false in fact, and at the time he made them he knew them to he false, it would he a mockery upon justice to allow him to say that he made those entiles with innocent intent. In such
Notice, gentlemen, that in all the instances I hare named I have given prominence to the fact of knowledge in the person doing the act. I do not mean that a man can be convicted of the crime charged in this indictment for merely negligent, careless action. Speaking generally I may say that, if the director making the false entry was in fact ignorant of the condition of the bank, and did not know its resources and liabilities, however recreant he might be to the position he held and the duties devolving upon him, and whatever other liabilities, civil or criminal, he might thereby be subject to, he could not be convicted under the section on which this indictment is based; and yet I ought to add that this does not in any wise justify or authorize a director to purposely, willfully, and knowingly close his eyes and his ears to the facts around him, or which lie directly in his path, for the purpose of making it easier to those engaged in plundering or wrecking a bank. Let me illustrate my meaning: If a director of a national bank, knowing that those in charge of or actively managing the bank are despoiling it, robbing its treasury, knowing that the funds of the bank are being dissipated, improperly withdrawn from the bank, and worthless paper (miscalled “securities”) is being substituted instead thereof, — if, thus knowing, such director refuses to accept the information lying directly across his path, and purposely keeps himself in ignorance or refrains from taking active part in the bank’s management, that he may thereby permit such transactions to go undisturbed or undetected, and he then lends the credit of his name, puts his signature to untrue and false reports connected with the condition of the bank for the purpose of enabling such a fraud to go undetected, — in - such a case it will be no shield to him to show that he had no knowledge of the truth or falsity of the report he has.signed. To hold otherwise would be to make the law go hand in hand with rankest injustice, to legalize robbery, to make our temples of justice modern cities of refuge, and our courts encouragers of what plain people properly call crime.
Therefore I have to say to you, gentlemen, as the law of the case upon this point, that if the defendant, at the date named in the re- . ports to the comptroller named in the indictment, as submitted to you, knowingly inserted in a report of the resources and liabilities of his bank a false entry as heretofore defined to you, and as charged in the indictment submitted to you, of such a nature that the ordinary, natural, and legitimate result thereof would be to deceive the other officers of the bank, or any one of them, or any agent then or thereafter appointed to examine affairs of said bank, or to defraud the bank or any other company, body politic, or corporation, or any individual person whatever, then, in the absence of contravening proof, you are authorized and justified to find that defendant made such false entry with the intent to deceive or to defraud, within the meaning of the statute, and to find against the defendant as to the second and remaining point as above stated.
You may have noticed, as I stated to you the section under which, defendant has been brought to trial, that the statute does not require
Your verdict, gentlemen, must be found upon the evidence introduced before you, and be considered by you under the law as given by the court. As I have heretofore said to you, this trial commences before you with the presumption of innocence in favor of defendant, and your verdict must he for defendant, unless you And the evidence overthrows this presumption, and brings your minds beyond a reasonable doubt to a verdict of guilty.
I have to say to you further, gentlemen, and this statement is to be understood as affecting’ the entire charge given you, that, if yon can reconcile the evidence before you upon any reasonable hypothesis of the defendant’s innocence, it is your duty to do so. And, before yon can And the defendant guilty of the crime charged in the indictment, you must And such guilt beyond a reasonable doubt. This reasonable doubt relates to the defendant’s guilt under all the evidence. You will take up the evidence bearing on each proposition of fact, and de
The defendant has testified in his own behalf. This he had a right to do under the laws of the United States. And he has the same right to place himself on the witness stand that the law gives him to have any other person sworn as a witness in his behalf. But it is the duty of the court to state that the law sends his testimony to you charged with whatever may properly attach to or affect that testimony because of his interest in the result of the case. It has been but a few years, comparatively, since a defendant charged with crime was by law denied the privilege of testifying for himself. The theory of the law which refused to accept a man as a witness in his own defense,, when arraigned in court and on trial upon a criminal charge, was that the interest of the defendant in the case was necessarily so great, and so great the temptation to testify falsely in order to acquit himself, that the law refused to permit testimony so liable to be tainted with perjury to be placed before the jury; and therefore the mouth of defendant was closed by operation of law. But, as I heartily believe, a wiser policy or theory of law now prevails, and I had the pleasure of casting my vote in favor of a statute which, in the state courts of Iowa, has opened to a defendant in a criminal trial the full privileges of the witness stand; and the statutes of the United States award him the same privileges. The government, however, •cannot compel him to testify on his own trial. Possibly in some cases the evidence necessary to complete proof of guilt is alone in defendant’s possession, yet the district attorney, with all the power of this • great- nation behind him to compel witnesses to testify to the truth, is powerless to open the mouth of such defendant. The nation itself is not strong enough to force from a defendant, and against his will, •even a single word of testimony, or to compel such unwilling defendant to submit to the jury a paper or line of writing. But he may, if he will, testify in his own interest; and, when he does so testify, the
You are the sole judges of the testimony. Under the oaths yon have taken you are to receive, as the law applicable to this case, the instructions given you by the court, and yon are to be governed by them; but ii; is your sole province to determine the weight to be given to the testimony which has been introduced. Consider the demeanor of the witnesses on the witness stand; their relation to the defendant in any way, business or otherwise; their interest or lack of interest in the case, or their connection with any case which might be in any wise affected or influenced by the verdict to be rendered in this case; any bias or prejudice shown by them; the consistency or inconsistency of their statements; whether their testimony is corroborated or contradicted by other testimony regarded by yon as credible and worthy of belief; and, having considered the testimony in the light of all the circumstances in the case, give to the testimony of each witness that weight to which yon find it is entitled. Wherever you can consistently reconcile conflicting testimony, it is your duty to do so; but, where you find any conflict of testimony you cannot reconcile, do not hesitate to cast aside that which you deem incorrect and untrue, and accept and hold fast to the truth as you find it established in the evidence.
Gentlemen, take this case, determined to do justice both to the government and to the defendant. The government is in no wise entitled to, nor does it ask, the conviction of any man who is not proven guilty of the crime with which he is charged, nor should your verdict declare the guilt of such a one; but if defendant is proven guilty, within the terms of the instructions I have given you, it is your duty to say so by your verdict. Thus innocence is protected by our courts, and guilt is brought to its just punishment
