Case Name: STATE v. J. V. BURKE et al.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1928-07-31
Citations: 126 Or. 651
Docket Number: 
Parties: STATE v. J. V. BURKE et al.
Judges: 
Reporter: Oregon Reports
Volume: 126
Pages: 651–682

Head Matter:
Argued July 9,
affirmed July 31,
rehearing denied October 9, 1928.
STATE v. J. V. BURKE et al.
(269 Pac. 869; 270 Pac. 756.)
For appellant there was a brief over the name of Messrs. Sheppard, Phillips & Ralston and Mr. Oscar Furuset, with an oral argument by Mr. Chester A. Sheppard.
For respondent there was a brief over the names of Mr. Stanley Myers, District Attorney, Mr. George Mowry, Mr. Leon W. Behrman and Mr. John Mowry, Deputy District Attorneys, with oral arguments by Mr. Behrman and Mr. George Mowry.

Opinion:
BROWN, J.
Section 187, Chapter 207, General Laws of Oregon, 1925, codified as Or. L., Supp., page 1403, reads:
' ' Every owner, officer, director, or employee of any bank or trust company who embezzles, abstracts, or willfully misapplies any of the money, funds, credits, assets or property of such bank or trust cdmpany, whether owned by such bank or trust. company or held for safe keeping, or as agent, or held in trust, or who, without authority of the board of directors of such bank or trust company, issues or puts forth any certificate of deposit, draws any order, draft or bill of exchange, makes acceptance, assigns any note, bond, draft, bill, bill of exchange, mortgage, judgment or decree, or who makes any false entry in the books or statements of the bank or trust company, with the intent in either case to injure or defraud such bank or trust company, or deceive any officer of such bank or trust company, or any person who with like intent aids or abets any owner, officer, director or employee of any bank or trust company, in violation of this section, shall be deemed guilty of a felony, and, upon conviction thereof, shall be punished by a fine of not more than $5,000 or by imprisonment in the state penitentiary not less than one year nor more than twenty years, or by both such fine and imprisonment, in the discretion of the court. ' '
On May 14, 1909, the Bank of Kenton was incorporated as a state bank, with a capital stock of $50,000 divided into 500 shares of the par value of $100 each. The original incorporators were H. W. Mahan, J. W. Sifton and Geo. F. Heusner. Its principal place of business was at Kenton, a suburb of the City of Portland. At the time of its organization, or shortly thereafter, J. V. Burke, defendant herein, was elected vice-president, and, at the time of the alleged offense charged in the indictment, held the office of president. Burke was likewise a stockholder, director and vice-president of the United Meat Company, the corporation referred to in the indictment. The certificate of the State Bank Examiner authorizing the bank to engage in business was issued on October 8, 1909. It closed its doors as a going concern on December 3, 1926, about twenty days after the payment of the alleged'fraudulent check out of its funds. A few days later the United Meat Company, a corporation, the drawer of the check, went into the hands of a receiver, where it yet remained at the closing of the record made in this cause.
So far as material to this case, the by-laws adopted by the Bank of Kenton on its organization provide:
"It shall be the duty of the president to preside at all meetings of the stockholders and directors .
"The president shall have general charge and supervision of all the officers and employees of the corporation, and in all cases where the duties of the subordinate officers and agents of the corporation are not specifically prescribed by the by-laws or by reso lutions of the stockholders, or where their duties are not prescribed by the board of directors, they shall obey the orders and instructions of the president.
"He shall exercise such g-eneral direction and supervision over the affairs of the company as its interests may require, and shall perform all acts required by law of the president of a banking corporation."
State's Exhibit 6 for Identification reads:
"Stockholders' Meeting.
"Bank of Kenton.
"The annual meeting of the stockholders of the Bank of Kenton was held at the bank building on January 11, 1923, at 4:00 P. M. Mr. Heusner presiding.
"The following stockholders were present, representing the number of shares set opposite their respective names:
J. H. Thatcher, 10 shares.
R. R. Thatcher, 5 shares.
G-eorge F. Heusner, 20 shares.
"W. Keeler, 30 shares.
S. W. Herrman, 10 shares.
R. E. Menefee, 24 shares.
J. Y. Burke, 220 shares.
J. Gr. Edwards, by L. Enderud,
proxy, 5 shares
Baldwin Sheep & Land Co., by L.
Enderud, proxy, 45 shares.
"Approved:
J. Y. Burke, - A. M. Thompson,
"President. "Secretary."
The defendant asserts that the indictment is defective, first, for failure to aver the loss to the bank by reason of the alleged misapplication of its funds; second, for failure to allege that the misapplication of such funds was committed without authority of the board of directors; and, third, for failure to allege that the United Meat Company was insolvent. These objections are without merit. We have set out the indictment in full in our statement. The crime charged is a statutory offense that is fully defined by statute; and, as a general rule, in alleging the criminal act charged, it is sufficient to follow the words of the statute defining the offense. That rule is applicable to the case at bar: State v. Scott, 63 Or. 444 (128 Pac. 441); State v. Kubli, 118 Or. 5 (244 Pac. 512); State v. Owen, 119 Or. 15 (244 Pac. 516).
To be sufficient, an indictment must contain every element of the offense intended to be charged; it must apprise the accused of what he has to meet; and it must so define and identify the offense that he may, whether convicted or acquitted, be able to defend himself, in case he be again indicted for the same offense, by pleading the former record.
That the indictment in the case at bar informs the defendant of the crime with which he is charged, with such particularity as will enable him to prepare for his defense, there is no doubt. It identifies and defines the alleged offense so that, whether convicted or acquitted, he may, if indicted again for the same offense, defend himself by pleading the record of his former trial. Furthermore, it enables the court to see, without going out of the record, that a crime has been committed, and it explains the nature of that crime: Or. L., § 1448; Joyce on Indictments, § 9; Cochran and Sayre v. United States, 157 U. S. 286 (39 L. Ed. 704, 15 Sup. Ct. Rep. 628).
This case was tried upon the theory that there was a confederation between the officers of the Bank of Kenton and the United Meat Company wilfully to misapply the funds of the bank to the use and benefit of the meat company, with intent feloniously to injure and defraud the bank. Our statute provides that all persons concerned in the commission of a crime, whether they directly commit the act constituting the crime or aid and abet in its commission though not present, must be indicted, tried and punished as principals: Or. L., §1458, 2370. To sustain the charge contained in this indictment, it is essential that there be both a wilful misapplication of the funds of the bank and an intent to injure and defraud the bank. Briefly stated, then, the question that the jury was required to determine is as follows:
Did the defendant wilfully misapply the money, funds and credits of the Bank of Kenton by cashing the check described in the indictment, with the felonious intent to injure and defraud that bank?
Among the pertinent facts shown by the record, we note the following:
The paid-up capital of the bank was $50,000, and its surplus amounted to about $10,000. Under the law of this state limiting the amount of loan to any individual, firm, company or corporation to 20 per cent of its aggregate paid-up and unimpaired capital and surplus, $12,000 was the maximum amount that the bank could lend to the meat company. The United Meat Company had borrowed that amount on its promissory note, and, in addition, had drawn many overdrafts on the bank long prior to the date of the cashing of the check forming the nucleus of this litigation. During this time Burke was an officer of the bank, and, likewise, a stockholder, director and vice-president of the United Meat Company. The record further shows that President Burke, who had "general charge of all the officers and employees of" the bank, and whose guiding hand was exercising "such general direction and supervision over the affairs of the company as its interests may require," was, during this same period, personally liable on a promissory note for $16,900 in favor of Mrs. Didania Day, which note he had individually signed with A. A. Hallander, president of the United Meat Company. On this note only $500 was ever paid.
It should likewise be borne in mind in considering the evidence in this cause that Burke was not a mere figurehead in the workings of the banking institution. He was an experienced banker. He was the loan agent of the bank, and, under its by-laws, the bank's chief executive. He spent much of his time at the bank, and drew $200 a month for his services as president. He was by far the bank's largest stockholder, and necessarily wielded a great influence in the conduct of the affairs of the bank.
As a general rule, the cashier of a bank is the executive officer thereof, through whom the financial operations are conducted. But, in this connection, the following observation from 1 Banks and Banking, Michie, page 706, is pertinent:
"Under the custom and usage of modern banking, the president has been so generally clothed with power and authority beyond that ordinarily inherent in his office, as outlined above, that such custom and usage has been judicially recognized, and in some jurisdictions he is no longer looked upon as a sort of figurehead having only the powers of a director, but as the chief executive officer of the bank, having great influence upon the policy of the bank and the conduct of the various employees in the discharge of their duties * # ."
The state has marshaled an array of facts to show that the president of the bank must have had knowledge of, and participated in, the payment of the fraudulent overdrafts drawn by -the United Meat Company upon the Bank of Kenton. Was there sufficient evidence to take the case to the jury? This is the toilsome problem before us.
In the case of State v. Zullig, 97 Or. 427 (190 Pac. 580), the question of circumstantial evidence was involved; and Mr. Justice Bennett, a trial lawyer of wide experience, said:
"A case of circumstantial evidence is peculiarly one for the jury."
There is no direct evidence that Burke ever paid, or caused to be paid, a dollar on the check described in the indictment. There is no direct evidence that he ever saw the check, or that he knew that such a check had been drawn upon the bank. There is an abundance of evidence, however, that Thatcher, the cashier of the bank, saw the check, honored it, and caused payment thereof out of the funds of the bank. Moreover, there is evidence that he withheld the check from the records of the bank for several weeks. This fact is significant. In order to reach the verdict rendered, the jury must have determined from the evidence that there was a community of unlawful purpose and action between the president and the cashier of the bank in the matter of cashing the fraudulent check. That evidence, though strong and convincing, is, in its application to President Burke, indirect or circumstantial in character.
This takes us back to defendant's motion for a directed verdict. A motion for a directed verdict admits as true the plaintiff's evidence, and likewise every legitimate inference which may be drawn therefrom: State v. Williams, 102 Or. 305 (202 Pac. 428); State v. Elwell, 105 Or. 282 (209 Pac. 616).
In addition to the indebtedness of $12,000 evidenced by a promissory note giv.en by the United Meat Com pany to the Bank of Kenton at some time prior to the alleged cashing of the check mentioned in the indictment, the state established that, at the time the check was cashed, the meat company owed the bank about $150,000 arising from overdrafts of that company that had been issued and paid by the bank. The state adduced evidence tending to show that Burke had knowledge of this enormous indebtedness. Besides, a circumstance tending to show that Burke not only had knowledge of this indebtedness, but that he was likewise active in carrying on the affairs of the bank, lies in the fact that the indorsements of payments of interest on the $12,000 note were all in Burke's handwriting. His knowledge of the overdrafts is shown by an audit made by Haskins and Sells, and by a letter from A. A. Hallander in which there appears an express reference to a "$63,750 indebtedness." So, also, the record discloses a series of memorandum checks signed by Burke, president of the Bank of Kenton, on behalf of the United Meat Company, and in the handwriting of Burke we find the notation, "Interest on draft." An additional circumstance of some moment is found in the fact that Thatcher owned but a small interest, and Burke a large interest, in the bank, and that Thatcher was under the direction of Burke, who was present each day at the bank, and who was there when the fraudulent check for $3,669.10 was received by Thatcher. Furthermore, Burke not only had access to, but was familiar with, the books and records of the bank, and, as we have already stated, was the loan officer for that institution.
Another circumstance pressed upon our attention as tending to show knowledge and intention upon the part of Burke is a transaction with the United Meat Company with relation to a check for $2,878.21. On June 1, 1928, the Benson Commission Company sold the United Meat Company 49 head of cattle for $2,878.21. On June 7th following, the meat company, for the purpose of obtaining possession of the cattle, drew a check on the Bank of Kenton in favor of the Benson Commission Company for the amount of the purchase price of the cattle, and at the same time prepared an original deposit slip in that amount, together with a duplicate thereof, thus indicating that on that date the United Meat Company had deposited in the Bank of Kenton to the credit of the Benson Commission Company the sum of $2,878.21. The Bank of Kenton accepted this check and the two deposit slips and placed an O. K. upon the duplicate deposit slip, in effect certifying that there had been deposited by the United Meat Company in the Bank of Kenton to the credit of the Benson Commission Company the amount of $2,878.21. This duplicate deposit slip bearing its false 0. K. was delivered by the Bank of Kenton to the representative of the United Meat Company, who, in turn, delivered it to the Benson Commission Company; and that company, in the belief that the amount of $2,878.21, had, in truth, been deposited to its credit in the Bank of Kenton, executed a "gate order" for the 49 head of cattle. The check, though in the possession of the bank from June 7th, was held in suspension until June 30th, when it was charged to the ostensible or visible account of the meat company. This particular transaction was handled by J. V. Burke himself, and the fraudulent O. K. was written by him. Moreover, at the time of the presentation of that check to the bank, the meat company was indebted to the bank in an amount exceeding $100,000, and had no funds in its ostensible or visible account. The writer regards this transaction as a most important one, as lending strong support to the contention of the state and the finding of the jury that Burke at all times had knowledge of, and acquiesced and participated in, the conduct of the affairs of the bank.
A further circumstance that tends to show that President Burke had full knowledge of the insolvency of the United Meat Company and the large amount of overdraft due the bank at the time of the presentation of the check mentioned in the indictment is the fact that, more than two years prior to the crash, Burke, knowing that the meat company had overdrawn its account in a large sum of money, undertook to sell stock of that company in order that it might square its account with the bank, and that, during the campaign for the sale of the stock, Burke was advised by a salesman of the meat company's securities that the management of that company "was very bad," and that "the financial statement was poor."
From a careful analysis of the record in its entirety, the policy of defendant Burke is apparent. When the overdraft of the meat company amounted to but little more than $30,000, Burke disclaimed any responsibility therefor and stated that Thatcher, the cashier of the bank, was responsible for this condition ; but, notwithstanding this knowledge, and despite his authority as president, the cashier was retained and the amount of the overdraft, after being temporarily reduced on account of the sales of stock of the meat company, continued to grow, and to mount higher and higher, until, at the time of the presentation and acceptance of the fraudulent check at issue here, it had reached the enormous sum of $150,000.
The inference of guilt drawn by the jury from the character of the evidence adduced by the state was justified. Section 794 of our Code defines an inference as "a deduction which the reason of the jury makes from the facts proved, without an express direction of law to that effect."
The fundamental law of this state provides:
"The right of trial by jury shall be preserved, and no fact tried by a jury shall be otherwise re-examined in any court of this state unless the court can affirmatively say there is no evidence to support the verdict." Or. Const., Art. VII, § 3c.
That command is plain in statement, and definite and certain in meaning, and applies alike to criminal and civil causes: State v. Friddles, 62 Or. 209 (123 Pac. 904); State v. Hardin, 63 Or. 305 (127 Pac. 789); State v. Hill, 63 Or. 451 (128 Pac. 444); State v. Russell, 64 Or. 247 (129 Pac. 1051); State v. McPherson, 69 Or. 381 (138 Pac. 1076); State v. Catholic, 75 Or. 367 (147 Pac. 372, Ann. Cas. 1917B, 913); State v. Morris, 83 Or. 429 (163 Pac. 567); State v. Ragan, 123 Or. 521 (262 Pac. 954). The contrary holding, as set out in the case of State v. Evans, 98 Or. 214 (192 Pac. 1062, 193 Pac. 927), is not, in the opinion of this court, the better view.
The testimony relative to another and similar offense claimed by the state to have been committed by Burke, i. e., involving the cashing of the check for $2,878.21 as hereinbefore set out, was received over the defendant's objection.
It is a familiar rule that all evidence must be relevant, and that "evidence of other acts, to be available, must have some logical connection and reveal evidence of knowledge, design, plan, scheme or conspiracy of the crime charged." Underhill's Criminal Evidence (3 ed.), § 154. In many instances, evidence of another offense is relevant to prove motive or identity. While it is apparent that the jury in the cause at issue found Thatcher to he only one of a number of accomplices who wilfully confederated and conspired to misapply the property of the Bank of Kenton, and thus to injure and defraud the bank, the verdict is based upon a broad range of evidence. The conspiracy to commit the crime denounced by the statute was established by the detached acts and statements of the individual conspirators; and, as held in United States v. Goldberg, 7 Biss. 175 (Fed. Cas. No. 15,223), the acts of the parties in the particular case under investigation, the nature of such acts, the declarations and statements of the parties, either verbal or written, and the character of the transaction or series of transactions, with the accompanying circumstances as the evidence may disclose them, should be investigated and considered as sources from which evidence of the existence or nonexistence of the conspiracy may be derived. As illustrative, we take the following from the pen of Mr. Justice Burnett in State v. Kubli, 118 Or. 5 (244 Pac. 512):
"It is not by a single detached transaction alone that we must judge the situation. It is competent to show what manner of man, financially, the drawer of the check was. To that end the mortgages, unpaid as they were, were .competent evidence."
In proof of the essential allegations of the indictment, the record book of the Bank of Kenton showing the capital and surplus of that institution was admissible. Likewise, the note of the United Meat Company to the Bank of Kenton was relevant. So, too, were the pages from the record book of the Bank of Kenton and the daily statements of the commercial and savings departments of that bank. Neither is there any question but that the stock ledger of the bank was competent as part of the res gestae, in showing the particular interest of Thatcher and of Burke in the bank. The minutes of the United Meat Company, showing that Burke was a stockholder and an officer of that corporation, were relevant: State v. Whiteaker, 118 Or. 656 (247 Pac. 1077); 16 C. J. 651, § 1290. The oath of office administered to defendant Burke as director of the United Meat Company was competent. The record of that company relating to the issuance of the check for $3,669.10 referred to in the indictment was relevant and competent for the reason that that record was made by one of the alleged conspirators. The account of the United Meat Company with the Bank of Kenton kept by one David D. Briggs who, as secretary of that company, drew the fraudulent cheek knowing that the meat company had no funds in the bank, was likewise relevant: State v. Kubli, supra; State v. Owen, supra; Kingsbury v. State, 27 Ariz. 289 (232 Pac. 887). Under the authorities just cited, that certain check for $110.25, drawn by the United Meat Company upon this bank in favor of the Benson Commission Company, and purporting to have been deposited with the check for $3,669.10, was relevant, as were the entries in the teller's blotter pertaining to that check and to the check described in the indictment. The Bank of Kenton's ledger sheet covering the account of the Benson Commission Company, i. e., Customers' Ledger Sheet No. 105, was competent and relevant for the purpose of showing that the check involved was held in suspension from November 12th to November 26, 1926, inclusive. The prosecution properly introduced the hank's ledger sheet No. 97, relating to the account of the United Meat Company, for the purpose of showing that the check for $110.25 was not charged to the account of the meat company until November 27, 1926, and that the check for $3,669.10 referred to in the indictment was not charged to the meat company during the period covered by that ledger sheet. Lastly, as regards the cheek described in the indictment and the duplicate deposit slip in that amount, it requires neither argument nor citation of authority to support the holding that these papers were properly admitted into the record.
Defendant also objected to some evidence of record in relation to the Union Stock Yards, the Benson Commission Company and other matters, that is remote in character. However, though this evidence was not material to a decision of the case, it is not within the bounds of fair reasoning to hold that the substantial rights of the defendant were prejudiced thereby.
A case squarely in point with the facts in the case under consideration, and valuable for its learning and perspicuity, is that of Kingsbury v. State, 27 Ariz. 289 (232 Pac. 887). That case was prosecuted under a statute similar to ours; and the Supreme Court of Arizona, in rendering the opinion therein, thus stated its views:
"Where the disputed elements of an offense are the intent, and a conspiracy to defraud, it is plain that the scope of the evidence must be wide. Intent can only be determined by the acts of the party and his knowledge of the situation when he acts. It was not only permissible, but even necessary, for the state to show, as bearing on the intent and the conspiracy, the condition of the cattle company and the bank, the entire history of the transaction complained of, and the circumstances showing the extent of defendant's knowledge thereof."
The language above set out is clear and the reasoning sound; and we are satisfied that the holding is correct.
The defendant in his brief says that the court erred in failing to give certain requested instructions, the first of which was, in effect, a charge for a directed verdict of not guilty. The next was embraced in the general charge of the court. Defendant also requested the court to charge the jury that if Burke did not see the check until after it was cashed, the verdict should be not guilty. Under the law of this state, as we have heretofore indicated, it makes no difference whether Burke ever saw the check or not, if he, wilfully and knowingly, for the purpose of injuring and defrauding the bank, committed any affirmative act in aiding and abetting the chief actor in the commission of the alleged offense.
The defendant saved an exception to the instruction of the court wherein the jury was charged that "no bank or trust company shall loan a sum exceeding twenty per cent of its aggregate paid-up and unimpaired capital and surplus to any individual, firm, company or corporation." This instruction was pertinent and permissible: Kingsbury v. State, supra.
Another instruction complained of contains the following:
' ' There would be no protection for the stockholders and depositors of any bank if the officers in charge of its business could be allowed to parcel out its funds in such a manner to irresponsible persons and concerns."
While that statement is true, it was not a matter for comment by the court. It were better unuttered. But, in view of the statute and the Constitution of this state, we do not believe that this or any alleged error disclosed by the record in the trial of this cause should reverse the case. Section 1626, Or. L., provides :
"After hearing the appeal the court must give judgment, without regard to the decision of questions which were in the discretion .of the court below, or to technical errors, defects, or exceptions which do not affect the substantial rights of the parties."
And the people, by their Constitution, have directed :
"Until otherwise provided by law, upon appeal of any case to the Supreme Court, either party may have attached to the bill of exceptions the whole testimony, the instructions of the court to the jury, and any other matter material to the decision of the appeal. If the Supreme Court shall be of opinion, after consideration of all the matters thus submitted, that the judgment of the court appealed from was such as should have been rendered in the case, such judgment ¡shall be affirmed, notwithstanding any error committed during the trial Or. Const., Art. VII, '§ 3c.
When Article VII of the Oregon Constitution was submitted to the voters of this state by the People's Power League, the purpose of Section 3c was expressed in the Campaign Pamphlet in the following language:
"To simplify procedure on appeals to the Supreme Court and remove the pretext for new trials in those cases in which substantial justice is done by the verdict and judgment, but in which the trial court may have made a technical mistake."
For the petition, Messrs. Sheppard, Phillips & Ralston, Mr. Oscar Fwruset, Mr. A. I). Leedy and Mr. Martin L. Pipes.
No appearance contra.
While we have not specifically discussed every assignment of error, each assignment has received our careful consideration.
With a full realization of the importance of this cause to the defendant and to the public, we are constrained to hold that the law and the evidence calls for an affirmance of the judgment of the trial court.
Affirmed. Rehearing Denied.
Rehearing denied October 9, 1928.