Court Opinion

ID: 9653058
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:37:53.539019+00
Date Added: 2024-06-11T18:12:54.881848
License: Public Domain

SAWTELLE, Circuit Judge
(dissenting).
In order to appreciate the importance of the inquiry made by one of the jurors, and of the court’s reply thereto, it will be necessary to repeat here portions of the record as set forth in the majority opinion. As stated in that opinion, at the beginning of the trial appellant’s attorney -made the following statement:
“Mr. Cannon: I will state, if the Court please, as far as Mr. Morrissey is concerned, we think there will be very few matters in dispute with respect to him. We admit the corporate entity of the bank and the fact it is a member of the Federal Reserve System, as alleged in the indictment. We think there will be no question as to the fact that these particular notes were executed, actually executed by the persons named in the indictment as being the signers of the notes. As far as Mr. Morrissey is concerned, there will be no dispute as to the fact the cashier’s checks recited in the indictment were as a matter of fact issued by the Pacific National Bank. On those matters so far as Mr. Morrissey is concerned, we are willing to stipulate on them for the purpose of expediting the trial and the only real issue so far as we now see it, as to Mr. Morrissey, is going to turn on the matter of intent anyway, and if by the making of stipulations of that kind as to the execution of those various documents, the trial can be expedited, we are very anxious to do that.”
It will thus be seen that appellant’s defense was that of good faith — “the matter'of intent.” The learned judge instructed the jury that: “The intent to injure or defraud is presumed when the unlawful act which results in loss or injury is proven to have been knowingly committed.”
And that: “A reckless act is to be regarded as the equivalent of a wilful one. Thus, in the present ease, if you find beyond a reasonable doubt that the defendants, or any of them, misapplied the moneys of the Pacific National Bank with reckless disregard of the protection of the Bank, such action is to be considered as a wilful misapplication of the funds of the Bank on the part of such defendants.”
One of the jurors, who had evidently been impressed by the instructions to the effect that “the intent to injure or defraud is presumed when the unlawful act which results in loss or injury is proven to have been knowingly committed”, asked the court, in effect, whether the same presumption applied to reckless misapplication of funds. The court’s reply is set forth in the majority opinion. *279The juror was told that the same presumption followed in the case of a reckless misapplication. I do not think this is a correct statement of the law. It is claimed, however, that, in the colloquy which followed between the court and counsel, the court acquiesced in the contention of counsel and modified the instructions accordingly. I do not think this is correct. It did not cure the error, but rather emphasized it. The question was not whether the jury were “required to presume an intent to defraud from mere recklessness,” but, rather, whether as a matter of law an intent to defraud is presumed from the doing of reckless acts. This so-called modification of the instruction was in fact no modification at all, and the erroneous instructions as to the right of the jury to presume an intent to defraud from a “reckless misapplication of funds” was never withdrawn.
The statute is directed, not against a reckless misapplication of funds, but against a willful misapplication thereof with intent to defraud. One might recklessly, rashly, negligently, or foolishly loan money of a bank without requiring proper security, or otherwise observing good business methods, but that would not be a misapplication of the funds within the meaning of the statute. The intent to defraud is the gist of ihe offense charged,
I think the instruction given was prejudicial, and the judgment should be reversed.