Opinion ID: 2172607
Heading Depth: 1
Heading Rank: 16

Heading: There is a fatal variance between the allegations of ownership of the money by the town and the proof.

Text: In my opinion, there was a fatal variance between the allegations of count 2 which names the Town of Leonardtown as owner of the money allegedly embezzled by way of the less cash transactions and the evidence which establishes that the two local banks owned the money. Count 2 provides in relevant part, as follows: That William M. Loker, Jr. on July 1, 1949 and then continuously up to and including June 30, 1963 at St. Mary's County aforesaid, feloniously and fraudulently did embezzle from the Commissioners of Leonardtown, a municipal corporation of the State of Maryland, in the sum of $110,229.83, United States Currency, the property of the said Commissioners of Leonardtown, a municipal corporation of the State of Maryland, in violation of Article 27, Section 129 of the Annotated Code of Maryland, contrary to the form of the Act of Assembly in such case made and provided, and against the peace, government and dignity of the State. (Emphasis supplied.) As the majority points out, our predecessors in State v. Tracey, 73 Md. 447, 21 A. 366 (1891) determined that the ownership of such money alleged to be embezzled under Section 129 must be alleged in the indictment and is one of the elements of the State's proof to obtain a conviction under Section 129. The allegation of ownership of the money allegedly embezzled in the town was, therefore, an essential element of the crime and not merely a matter of surplusage. As was earlier pointed out, the trial judge instructed the jury that only the less cash money could be considered by the jury under count 2. In my opinion, our holding in Richardson v. State, 221 Md. 85, 88, 156 A.2d 436, 438 (1959), that an allegation of ownership of stolen goods [in a larceny indictment] is supported by proof of any legal interest or special property in the goods, as, for instance, where the person named in the indictment is in lawful possession as a bailee or common carrier is not applicable to the present case as the majority of the Court of Special Appeals held it was. As was observed in Tracey, the statute makes the offense under Section 129 larceny and a felony and hence the allegation of ownership is a necessary element to be alleged in the indictment and proved by the State. As we stated in Richardson v. State, 221 Md. 85, 87-88, 156 A.2d 436, 437-48 (1959)    the reason that a sufficient allegation of ownership is an essential requisite in a larceny indictment in that the court must be able to determine judicially that the property alleged to have been stolen was that of another and not the property of the accused, and also that the defendant is entitled to be informed of the exact accusation against him citing with approval State v. King, 95 Md. 125, 51 A. 1102 (1902). Larceny is a criminal trespass against possession. Inasmuch as possession is an essential element, proof that the person alleged to be the owner of the stolen goods was a person lawfully entitled to possession by reason of a legal interest or special property in the goods, has been deemed to be sufficient proof of ownership in the person set forth in the indictment. Richardson v. State, supra . The proof in this case establishes that both ownership and possession of the less cash money were in the respective banks and that the town never did have either ownership or possession of that money, or any legal interest or special property in that money. It is stated in the majority opinion that there was testimony that, in some instances, the appellant asked a teller receiving deposits in this fashion to give him larger bills and said he was going to put them in the other bank. In fact, no such deposits were made in the Town's other account. (Emphasis supplied.) An examination of the testimony of the four bank tellers who testified in the case for the State fails to indicate to me that any of them testified that the defendant said he was going to deposit the less cash money in the town's account. For example, Anita L. Russell, teller for the Maryland National Bank, testified on this point, Well, he usually asked for larger bills and said he was going to put them in the other bank. (Emphasis supplied.) This testimony is similar to the testimony of the other tellers. Lillian Pegg Smith, teller of First National, although at first indicating that the statement was made by the defendant, later testified that it could possibly have been made by Mrs. Weber, the defendant's secretary, and stated: I assumed it was Maryland National but they never told me it was Maryland National. (Emphasis supplied.) Not only does the testimony of the tellers in regard to alleged statements by the defendant fail to indicate a contemplated deposit to the credit of the town, but no teller stated that this was her impression or understanding of the alleged statement by the defendant and, as indicated, Mrs. Smith testified that she assumed the other bank was Maryland National, but even here, she did not say that she assumed or understood that she knew the town had an account in Maryland National or that the defendant was to deposit the less cash money in such an account. In short, the testimony of the tellers is entirely consistent with the theory that the defendant intended to convert the less cash money to his own use at the time he received that money from the banks, and the State proved, as the majority indicates, that the defendant did not make any deposits of the less cash money in the town's accounts in either bank. There is no evidence whatever in the case that the defendant received the less cash money for some proper town purpose and sometime later decided to convert it to his use. All of the evidence indicates the contrary. Any crime committed by the defendant was therefore committed at the moment he received the less cash money from the tellers. The majority states    it is clear that this teller when such money was delivered by him to the appellant intended to pass title to the Town. As has been indicated, there is no evidence whatever of such an intention by any of the tellers. They did not so testify and it would be most unlikely that they had any intention other than to hand over the money to the defendant. It was no concern of theirs what the defendant did with the money and there was no suggestion in the testimony that they gave the question of passing title to the town any thought whatsoever. It may be observed also that it is the intent of the defendant in regard to the money received and not the unexpressed and non-existent intent of the tellers with which one is concerned in this case. When the question involved is whether or not the town owned or had a special interest in the less cash money, I find rather extraordinary the statement in the majority opinion that the defendant's reliance upon the intricacies of civil liability as between the Town of Leonardtown and the banks has little relevance to the criminal charge here involved and the question of guilt or innocence is not dependent upon the many issues that can be raised in connection with the deposit of commercial paper, title thereto and the right to charge back credit given. How can the question of ownership or a special interest of the town in the money be determined except by a consideration of the applicable statutory and common law relating to such a property right? The criminal law sheds no light upon this question which is entirely civil in nature. It is quite clear to me from an examination of the applicable statute and prior decisions of this and other courts, that the town did not own and had no interest, special or otherwise, in the money of the two banks reposing then in the cash drawers of the tellers of those banks. It is fundamental that the relationship between the bank and its general depositor is that of creditor and debtor. Keller v. Frederickstown Savings Institution, 193 Md. 292, 296, 66 A.2d 924, 925, 10 A.L.R.2d 423, 426 (1949). The bank is the debtor, the depositor is the creditor and the bank is the owner of its assets and cash in which the depositor has no rights of ownership or property. Keller v. Frederickstown Savings Institution, supra , Dunlop Sand & Gravel Corp. v. Hospelhorn, 172 Md. 279, 191 A. 701 (1937). If the bank becomes insolvent, its cash and other assets pass to its receiver and the general depositors are general creditors of the receivership estate. Dunlop Sand & Gravel Corp. v. Hospelhorn, supra . The evidence is uncontradicted that the accounts involved in the less cash transactions were general checking accounts in which the bank was debtor and the town was creditor. It is also quite clear that both under the applicable law and the contract between the town and the banks, the tellers had no right to pay over the less cash money to the defendant for any purpose, legitimate or otherwise. All of the checks listed on the less cash deposit slips were restrictively endorsed For deposit only, Comm. of Leonardtown. By virtue of Code (1957) Article 11, Section 121 (then in force), this type of endorsement is deemed a restrictive endorsement and the endorsee bank is an agent for collection and was not an owner of those restrictively endorsed checks. Leonardi v. Chase National Bank, 263 App. Div. 552, 33 N.Y.S.2d 706 (1942), appeal denied, 264 App. Div. 771, 35 N.Y.S.2d 276 (1942). In addition to the general law establishing these principles, the contracts of the town with the banks, introduced in evidence by the State (see State's Exhibit 17), provide: In receiving items for deposit or collection, this bank acts only as depositor's collecting agent and assumes no responsibility beyond the exercise of due care. All items are credited subject to final payment in cash or solvent credit. It is apparent to me that banks, their officers and employees, are charged with knowledge of these elementary principles of law applicable to commercial paper and, in this case, there is no doubt that there was actual knowledge as well. Francis C. Delahay, assistant vice president of First National, testified for the State and stated on cross-examination as follows: Q. If the checks that are offered with the less cash deposit slip are stamped on the back thereof for deposit only, will the bank then honor a less cash request on a deposit slip? A. We would normally ask that the person presenting the checks to amend such an endorsement. Q. In other words, remove it? A. Amend it by removing the words for deposit only. Q. The words, for deposit only, are referred to as a restrictive endorsement, are they not? A. That's correct, sir. Q. And the restriction is that the checks are only to be deposited into the account in connection with which they are deposited, isn't that right? A. That is the common meaning given to that expression in banking circles. The restrictive endorsement requires the bank to credit the entire proceeds of the check then endorsed to the payee's account in the bank, and if the bank fails to do this, the bank becomes liable to the payee  depositor for the full amount of the check. See Duckett v. National Mechanics' Bank, 86 Md. 400, 409-410, 38 A. 983, 986 (1897). See also Frederick A. Potts & Co. Inc. v. Lafayette Nat. Bk., 269 N.Y. 181, 199 N.E. 50 (1935). When the tellers of the banks handed the less cash money to the defendant, they handed him the bank's money in which the town had no ownership or title whatsoever and indeed violated the legal obligation and the contracts of the banks with the town in failing to give the town full credit for the total amount of the restrictively endorsed checks, rather than the net amount after the less cash deduction from the total amount of checks. See Fidelity & Deposit Co. v. Marion Nat'l. Bank, 116 Ind. App. 453, 64 N.E.2d 583 (1946). The town legally suffered no loss from the incorrect action of the banks which was contrary to the applicable law and the deposit contracts, and, in my opinion, it follows that the town had no ownership, special interest, lien or other legal interest in the bank's money erroneously and incorrectly paid over to the defendant. It is obvious also that the less cash transactions cannot be considered as withdrawals from the town's account as a withdrawal could only be accomplished by the joint signature of both the president of the Town Commissioners and the treasurer of the town. The banks  not the town  were the victims of any crime committed by the defendant and the indictment should have been based on this theory so far as the less cash transactions are concerned. The decision of our predecessors in Simmons v. State, 165 Md. 155, 167 A. 60 (1933), strongly suggests that this would have been the proper way to have proceeded in this case. In Simmons, the accused in that case had falsely represented to a bank that one of its corporate depositors (of which the accused was an officer) had authorized him to make certain withdrawals from the corporation's bank account. The indictment charged the accused alternatively with larceny and in obtaining the money of the bank by false pretenses. Judge Parke, for the Court, stated: The indictment charged him with larceny of money from the Citizens' Bank of Hurlock, Maryland    and with obtaining money from the bank by false pretenses   . (165 Md. at 159-160, 167 A. at 62.) (Emphasis supplied) The substance of the offense was the obtaining of the money and, with a fraudulent intent, depriving the lawful owner of its title and possession   . [The] transfer was effected by the bank paying out its money on the order of the [defendant], to his nominees by reason of the prior false and fraudulent pretense or representation by the [defendant] to the bank that the money of the bank, induced to be paid out for the benefit of the [defendant] had been agreed by the [corporate depositor] should    be charged against the deposit account with the bank of the [corporate depositor]. (165 Md. at 162-163, 167 A. at 63.) (Emphasis supplied.) The uncontroverted circumstances, at the time of the making of every one of the false pretenses, were    that the corporate third party did have in the bank ample deposits to meet the several sums obtained from the bank by the [defendant]; and that the bank actually charged these sums to the deposit account of such third party with the bank, and, subsequently, was obliged to refund these sums to such third party because the charges so made were unauthorized. (165 Md. at 175-176, 167 A. at 68.) For these reasons, I conclude that there was a fatal variance between the required allegations of ownership of the money in count 2 and the proof and that for this reason, the conviction of the defendant on count 2 should be reversed.