Court Opinion

ID: 6691440
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:38:18.496784+00
Date Added: 2024-06-11T16:01:07.043562
License: Public Domain

CAMPBELL, J.
(dissenting). ' Section 8991, Code 1919, upon which the 'indictment here is based, first appeared in our law as section 39 of article 2, chapter 222, Laws .1909, and was amended to its present form by section 43, art. 2, c. 102, Laws ,1915. The source statute is section 5209, Rev. St. U. S. (U. S. Comp. .§ 9772), relating to officers and employees of national banking associations, which is followed almost verbatim in our statute. The federal statute first appears as section 55, Act. of June 3, 1864, chapter 106 (13 Stat. L. 116), and has been frequently before the courts since that date, and- comes to us *403charged1 with such interpretations thereof as may have been rendered by the Supreme Court of the United States — at least it may properly be said that in interpreting this statute 'we should give respectful consideration to the decisions of that court thereon, extending over a period of some 45 years prior to the date when we adopted the statute as our own.
In 'the instant case the indictment purports in general terms to charge “willful misapplication of the funds of the bank by use of a credit.” . The indictment cannot be sustained under the provision brought into the statute by the 1915 amendment as” an indictment for “wrongfully diverting to his own use, through the use of accommodation notes or credits^” because, there is no allegation in the indictment that the money in question was in fact diverted to the use of the officer Johnson. On the other hand, if the indictment in fact is sufficient to show “willfu'1 misapplication” under the statute, the indictment could' be ' in no- wise harmed by the fact that the means or method' by which such misapplication is charged to have been accomplished is by use of a credit.
The federal decisions on the proposition of “willful misapplication” under the federal statute from which our own was taken as hereinbefore indicated are voluminous, and on some points difficult to reconcile., and an examination of the cases lends sympathetic understanding to the frame of mind of the United -States district judge who.ended his opinion on demurrer to a 16-count indictment for “willful misapplication” in these words:
“It is much to be hoped that this decision will 'be reviewed. Anything more unsatisfactory than the ruling cases on ‘willful misapplication’ I have rarely met.” Hough, D. J., in United States v. Heinze ( C C.) 183 F. 907. See also United States v. Heinze (C. C.) 161 F. 425; United States v. Morse (C. C.) 161 F. 420; United States v. Heinze, 218 U. S. 532, 31 S. Ct. 98, 54 U ed. 1139, 21 Am. Cas. 884.
However, regardless of what conflicts, whether real or apparent, may appear in the federal decision- on some phases of this matter, I believe that they are entirely iniform on two propositions : First, that the words “willfully misapplied” have ns? settled technical meaning, and must be aided by averments showing how the misapplication was made, and that it was unlawful. *404Second', that to establish the offense of “willful misapplication” under the statute it must appear, and must be charged as one of the essential elements, that -by reason of such misapplication funds or property of the bank have been absolutely withdrawn beyond the control of the bank, and its funds and property by such misapplication actually depleted.
“The words ‘willfully misapplied’ are, so far as we know, i.ew in statutes creating offenses, and they are not used in describing- any offense at common law. Thev have no settled technical meaning like the word ‘embezzle’ as used in the statutes, or the words ‘steal, take and carry away,’ as used at common law. They do not, therefore of themselves fully and clearly set forth every element of the offense charged. It would not be sufficient simply to aver that the defendant ‘willfully misapplied’ the funds of the association. This is well setted by the authorities we have already cited. There must be averments we have already cited. There must be averments to show how the application was made and that it was an unlawful one.” United States v. Britton, 107 U. S. 665, 2 S. Ct. 512, 27 U ed. 520.
“By the settled rules of criminal pleading, and by the previous decisions of this court, the words ‘willfullv misapplies,’ have no settled technical meaning, (such as the word ‘embezzle’ has in the statutes, or the words ‘steal, take and carry away’ have at common law,) do not, of themselves, fully and clearly set forth every element necessary to constitute the offense intended to- be punished; but they must be supplemented by further averments, showing how the misapplication was made, and that it was an unlawful one. Without s-uch averments, there is no' sufficient description of the exact offense with which the defendant is charged, so as to enable him to defend himself against it, or to plead an acquittal or conviction in bar of a future prosecution, for the same cause. United States v. Britton, 107 U. S. 655, 661, 669 [2 S. Ct. 512, 27 L. Ed. 520]; United States v. Northway, 120 U. S. 327, 332, 334 [7 S. Ct. 580, 30 L. Ed. 664] ; Evans v. United Slates, 153 U. S. 584, 587, 588 [14 S. Ct. 934, 38 L. Ed. 830].
“The general allegation, at the beginning of the count in question, that the defendant, on January 1, 1891, and at divers times between that date and July 8, 1893, being president, director and agent of a certain national banking association,did, as such *405president, director and ag'ent, willfully misapply forty thousand four hundred and twenty-two dollars and seventy-nine cents of the moneys, funds and credits then and there belonging to and the property of said association, in the manner following,’ is rightly admitted to be insufficient, unless the acts afterwards alleged ■amount to a willful misapplication of funds of the association, within the meaning of the statute.” Batchelor v. U. S. 156 U. S. 426, 15 S. Ct. 446, 39 L. Ed. 478.
To the same effect see Evans v. U. S 153 U. S. 584, 14 S. Ct. 934, 38 L. Ed. 830; Rieger v. U. S., 107 F. 916, 47 C. C. A. 61; Donegan v. U. S. (C. C. A.) 296 F. 843.
“The jury were instructed that the fact that Miller received credit in 'his account on the books of the bank for checks drawn on that bank or on other banks constituted a flagrant misapplication of the funds of the Commercial Bank, within the meaning <5f section 5209; yet it is apparent that merely giving credit to Miller on the hooks of the bank for the amount of the checks did not lessen the funds held by the bank, nor in fact defraud the association in any form. To complete a misapplication of the funds of the bank, it was necessary that some portion thereof should be withdrawn from the possession or control of the bank, or a conversion in some form should be made thereof, so that the bank would be deprived of the benefit thereof. It is not necessary in all cases that the money should be actually withdrawn from, the bank. Thus if, by connivance between a bank official and a customer of the! bank, the latter is allowed to draw checks on the bank, when the drawer has not the funds to meet the checks, and the same are' 'given by the drawer to third parties in payment of claims due them, and the third parties, instead of getting the cash on the checks, have been credited up to their accounts in the bank, this completes the misapplication of the funds of the bank, because the ■bank has become bound for the payment of the sums thus credited to the third parties, and the result is just the same as though the holders of the checks had obtained the money thereon, and had subsequently deposited it to their credit. In such cases the funds of the bank would be lessened, and thereby criminal misapplication might be completed. If, however, the customer presents the checks himself, and has the same crdited on his account, the crime of misapplication is not completed thereby, because the bank is *406not under legal obligation to pay out any of the amounts wrongfully credited to the customer, and may refuse to pay checks dra-wn against the inflated account, and may at any time charge bade against the customer the amounts of the checks upon which nothing was in fact realized by the bank. To complete the criminal misapplication of the bank funds in the supposed case, some sum must be paid by the bank to the customer, or tO' third parties on his order, or must be credited to third parties under such circumstances that the bank becomes bound for the payment thereof.” Dow v. U. S., 82 F. 904, 27 C. C. A. 140.
To the same effect is U. S. v. Martindale (D. C.) 146 F. 280; Prettyman v. U. S., 180 F. 30, 103 C. C. A. 384; Coffin v. U. S., 156 U. S. 432, 15 S. Ct. 394; 39 L. Ed. 481; Coffin v. U. S., 162 U. S. 664, 16 S. Ct. 943, 40 L. Ed. 1109; McCallum v. U. S. 247 F. 27, 159 C. C. A. 245.
I believe these propositions to be sound in principle in addition to having the support of the authorities, and in the instant case it is not sufficient merely to allege that the officer, Johnson, with intent to injure and defraud the bank, did willfully, knowingly, unlawfully, and feloniously misapply by use of credit certairi moneys, funds, credits, and property of the said bank.
Turning then to the allegations and averments in support of the general claim of willful misapplication, the allegation is that Johnson, knowing a certain note was absolutely worthless, caused the bank to discount the same, and “that the proceeds of said note, the aforesaid sum of $6,500, was, under the direction of the said Frank H. Johnson, then and there, knowingly, willfully, and in fraud of the said Sioux Falls Trust & Savings Bank, applied to the use, benefit, and advantage of certain persons tO' the grand jurors unknown and not to the use, benefit, or advantage of the said bank.” Whether an offense has thus far been charged depends entirely upon what may be intended by the clause “the proceeds * * * was * * * then and there * * * applied to the use * * * of certain' persons.” This clause might well be construed to mean that the proceeds of the discounted note were paid in cash out of the bank funds to the certain persons unknown, and, if that was the fact, and was alleged to be the fact, then a misapplication would be alleged. That, however, is merely a possible construction of the word “applied,” and not the necsessary one. Fur*407ther, if that were the construction, the offense would be thereby completed without the need of any additional averment, and such construction is impliedly negatived by the fact that additional averments are attempted to be made, which would be both unnecessary and meaningless, if the word “applied” must fce construed to mean “paid out in money.” Certainly the word “applied” might be used with equal propriety to cover the situation that would arise if the proceeds of the discounted note had been placed on deposit in the Sioux Falls bank to the credit of “ceratin persons unknown,” or if the proceeds of said discounted note had been given to “the certain persons unknown” in the form of a draft drawn by thej Sioux Falls bank on Minneapolis or 'Chicago. Under such circumstances the offense of willful misapplication would not be made out until it should be further shown, in the one case, that the deposit credit was either withdrawn or transferred in some way whereby the bank became legally liable for the payment, and its funds thereby depleted, and, in the other case, that the draft was in fact presented and paid whereby the funds or credit of the Sioux Falls bank with the drawee bank were depleted. It is entirely manifest, therefore, that the indictment has not’ thus far definitely alleged or sufficiently established any loss to the Sioux Falls bank or any depletion or withdrawal of its funds, property, or credit by the president, Johnson. The question then arises whether the indictment is aided in this respect by the remaining portion of the charge against Johnson, which is as follows:
“And that thereafter the sum of $6,500 was, through the account of various persons to the grand jurors unknown, withdrawn, and was then and there wholly lost to the said Sioux Falls Trust & Savings Bank, and the money, funds, credits and property of the same were and are depleted in that ambunt.”
It is perfectly apparent that this portion of the indictment can in no wise aid or complete what has gone before, except upon the indulgence of at least three assumptions: First, that the words “applied to the use, benefit, and advantage of certain persons” heretofore noticed must necessarily mean “deposited in the said Sioux Falls bank to the credit of certain persons.” Second, that the phrase “various persons' to the grand jurors unknown” in the portion of the indictment last above quoted, necessarily refers solely to the same persons intended by the phrase “certain *408persons to the grand jurors unknown” in the part of the indictment earlier quoted; and, third, that the sum of $6,500 claimed to be withdrawn as specified in the paragraph of the indictment last quoted represented in fact the proceeds oi the discounted note earlier mentioned, and was money wrongfully withdrawn, and which would not have been withdrawn but ior the discounting of said note. Other than by such inferences the withdrawal of $6,500 fromi the bank, or the depletion of the bank’s funds, as alleged in the portion of the indictment last .quoted, is not in any wise con-, nected with any acts of the defendant Johnson previously pleaded. "This important fact is left to mere inference, which is vicious pleading in indictments.” U. S. v. Martindale (D. G.) 146 E. 280.
Being of the opinion that the learned 1 rial judge rightly decided that respondent’s demurrer must he sustained, I must respectfully dissent from, the majority opinion in this case.