Opinion ID: 578193
Heading Depth: 3
Heading Rank: 2

Heading: Failure to Instruct Jury on Defendant's Good Faith

Text: 41 Haddock further contends that the district court erred by failing to instruct the jury on Haddock's good faith with regard to Counts 1, 2, 8 and 10. The government argues that Haddock has waived this objection as it relates to Counts 2 and 10 by not raising it prior to this appeal. The record reveals that Haddock's counsel tendered good faith instructions and objected to the court's failure to give good faith instructions only with regard to Counts 1 and 8. Because no objection was made to the lack of a good faith instruction with regard to Counts 2 and 10 prior to the jury's retirement, defendant has waived his right to so object. United States v. Sanders, 928 F.2d 940, 943 n. 2 (10th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 142, 116 L.Ed.2d 109 (1991); Lusby v. T.G. & Y. Stores, Inc., 796 F.2d 1307, 1311 (10th Cir.), cert. denied, 479 U.S. 884, 107 S.Ct. 275, 93 L.Ed.2d 251 (1986). Therefore, the only remaining question is whether the district court should have given a good faith instruction in connection with Counts 1 and 8, which involve violations of 18 U.S.C. § 656. When reviewing a challenge to jury instructions, we review the record as a whole to determine whether the instructions 'state the law which governs and provided the jury with an ample understanding of the issues and the standards applicable.'  Big Horn Coal Co. v. Commonwealth Edison Co., 852 F.2d 1259, 1271 (10th Cir.1988) (quoting Ramsey v. Culpepper, 738 F.2d 1092, 1098 (10th Cir.1984)). 42 It is well-established that good faith is a legitimate theory of defense to violations of § 656. See, e.g., United States v. Unruh, 855 F.2d 1363, 1369-70 (9th Cir.1987), cert. denied, 488 U.S. 974, 109 S.Ct. 513, 102 L.Ed.2d 548 (1988); United States v. Steffen, 641 F.2d 591, 596 (8th Cir.), cert. denied, 452 U.S. 943, 101 S.Ct. 3091, 69 L.Ed.2d 959 (1981). As a general proposition a defendant is entitled to an instruction as to any recognized defense for which there exists evidence sufficient for a reasonable jury to find in his favor. Mathews v. United States, 485 U.S. 58, 63, 108 S.Ct. 883, 887, 99 L.Ed.2d 54 (1988); United States v. Harting, 879 F.2d 765, 767 (10th Cir.1989). 43 The district court held that Haddock was not entitled to a separate good faith instruction because the specific instructions given on the meaning of the phrases willfully misapplies and intent to injure or defraud from § 656 sufficiently conveyed the essence of a good faith defense to the jury. Instruction No. 11 provided that [t]he phrase 'willfully misapplies' means the unjustifiable or wrongful use of the monies, funds or credits of the bank. Willful misapplication means more than bad administration. The instruction further stated that [t]he phrase 'with intent to injure or defraud the bank' means to act knowingly and with the intent to deceive or to cheat the bank--ordinarily for the purpose of either causing a financial gain or a financial loss to someone or something. In addition, we note that the court gave a separate good faith instruction on six other counts, but conspicuously did not include Counts 1 and 8--which charged violations of § 656--within the scope of that instruction. 44 In this circuit, we have held that general instructions on willfulness and intent are insufficient to fully and clearly convey a defendant's good faith defense to the jury. United States v. Mann, 884 F.2d 532, 536-37 (10th Cir.1989) (good faith instruction under 26 U.S.C. § 7203, willful failure to file income tax returns); United States v. Harting, 879 F.2d at 767 (same); United States v. Hopkins, 744 F.2d 716, 718 (10th Cir.1984) (en banc) (good faith instruction under 18 U.S.C. § 1341, mail fraud); accord United States v. Casperson, 773 F.2d 216, 223-24 (8th Cir.1985); see also United States v. Ratchford, 942 F.2d 702, 706-07 (10th Cir.1991) (under 18 U.S.C. § 657 [fraud on lending, credit and insurance institutions], there was no error in good faith instruction that defendant acting upon honest opinion or belief is not chargeable with fraudulent intent even if his opinion is erroneous or his belief is mistaken or wrong). We also have held that failure to give an adequate good faith instruction is reversible error provided the evidence is sufficient such that a reasonable jury could believe the defendant's good faith defense. Harting, 879 F.2d at 768. Based on clear precedent in this circuit, we hold that because the instructions in this case did no more than define willfulness and intent to injure or defraud under § 656, they did not adequately convey Haddock's good faith defense to the jury. 11 Therefore, we turn to the question of whether the evidence is such that a reasonable jury could believe Haddock's good faith defense. 12 45 Count 1 charges Haddock with presenting a check written on a First Finance account that he knew was short of funds by approximately $350,000. The account remained without sufficient funds between April 3, 1987 and April 15, 1987. At trial, Haddock testified that he relied on a representation by Patricia Fells--then an officer at the Bank of Herington--that the account contained sufficient funds to cover the check. He stated that he was not aware of a shortage of funds until long after April, 1987. In addition, Fells testified that the books at the Bank of Herington were not regularly balanced between April 3 and April 15 and that business at the bank was a nightmare due to the bank's acquisition of the failed First National Bank of Herington. She also suggested that Haddock would have put money into the account before April 15 had the lack of funds been brought to his attention. 46 Count 8 charges Haddock with misapplying $50,000 of funds forwarded by the Bank of White City to First Finance so that First Finance could make a down payment toward the purchase of the Galena loan package. At trial, evidence was introduced that Haddock instead used the money to make a loan payment on an unrelated loan at Kaw Valley State Bank. However, Haddock testified at trial that the $50,000 check given by the Bank of White City to First Finance had nothing to do with the purchase of the Galena loans. He testified that $25,000 of the money was to be placed into an escrow account and to be forwarded to First Finance as the Bank of White City received additional loans. He further testified that both entities agreed that First Finance could use the remaining $25,000 however it wished. 47 Based on this evidence related to Counts 1 and 8, we hold that Haddock was entitled to a good faith instruction in relation to those counts. Therefore, we reverse the convictions on Counts 1 and 8 and remand for new trial on those counts. 48