Court Opinion

ID: 5586957
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:56:21.609993+00
Date Added: 2024-06-11T08:36:17.397488
License: Public Domain

Atkinson, J.,
dissenting. 1. The indictment was drawn under section 28 of article 20 of the banking act approved August 16, 1919 (Acts 1919, pp. 135-219). That section declares: “Every insolvency of a bank shall be deemed fraudulent, and the president and directors shall be severally punished by imprisonment and labor in the penitentiary for not less than one (1) year nor longer than ten (10) years; provided, that the defendant in a case arising under this section, may repel the presumption of fraud by showing that the affairs of the bank have been fairly and legally administered, and generally with the same care and diligence that agents receiving a commission for their services are required and bound by law to observe; and upon such showing the jury shall acquit the prisoner.” The constitutionality of this provision of the act was raised by demurrer to the indictment. One ground of attack expressed in different forms in several of the grounds of demurrer was that the terms of the statute are so general and indefinite as to make the question of criminality dependent upon the idiosyncrasies of the men who may happen to constitute the court and jury, and are such as fail to show persons to be affected what standard of conduct is intended to be required, and for such reasons the statute is void as violative of the due-process clauses of the State and Federal constitutions. This exact question has been before this court only one time, Snead v. State, 165 Ga. 44 (supra), decided by five Justices, holding that the statute was not unconstitutional upon the ground stated. In Griffin v. State, 142 Ga. 636 (supra), Penal Code § 204, being substantially in the same language as section 28 of article 20 of the act of 1919, supra, was attacked as violative of the due-process clauses of the State and Federal constitutions, upon several specified grounds which did not include the ground of attack made in the case now under consideration — the ground of indefiniteness; and this court held that the statute was not violative of the due-process clauses of the State and Federal constitutions “for any of the reasons” assigned. This was not a ruling that the statute was sufficiently definite to satisfy the constitutions. This ruling was followed in Fordham v. State, 148 Ga. 758 (4) (supra), *601decided February 13, 1919. The original record of file in this court in that case discloses that the attack made on the constitutionality of the law in that case did not make the question as to indefiniteness ■ of the statute, and consequently no such question was decided. Neither was it decided in Kunsberg v. State, 147 Ga. 591 (supra).
In the recent case of Clins v. Frink Dairy Co., 274 D. S. 445, 455-458 (47 Sup. Ct. 681), it was held that the due-process clause of the 14th amendment to the Federal constitution requires a State, in framing criminal statutes, to frame them so “that those to whom they are addressed may know what standard of conduct is intended to be required.” Another principle ruled in that case, as embodied in the third division of the opinion, is that if a criminal statute in the first instance sufficiently describes the acts which it intends to punish, and proceeds further to enact provisos which materially affect its purport and effect, the first must be considered in connection with the provisos; and that if the statute as a whole fails to provide a definite standard of guilt, the statute will be insufficient to comply with the requirements as to due process of law as contained in the 14th amendment to the Federal constitution. That case involved a statute of the State of Colorado, which was held to be unconstitutional, and concerning which it was said: “The Colorado Anti-Trust law denounces conspiracies and combinations of persons and corporations, 1st, to create and carry out restrictions in trade or commerce preventing the full and free pursuit of any lawful business in the State; 2d, to increase or reduce the price of merchandise, products, or commodities; 3rd, to prevent competition in the making, transportation, sale, or purchase of commodities or merchandise ; 4th, to fix any standard of figures whereby the price shall be controlled or established; 5th, to make or execute any contract or agreement to bind the participants not to sell below a common standard; or to keep the price of the article at a fixed or graded figure, or establish or settle the price between themselves so as to preclude a free and unrestricted competition among themselves, or to pool, combine, or unite any interest they may have in such business of making, selling, or transporting that the price of the article may be affected. The foregoing language sufficiently describes, for purposes of a criminal statute, the acts which it intends to punish; but the Colorado law does not stop with that: it is accompanied by two provisos which materially affect its purport and effect. They *602are as follows: ‘And all such combinations are hereby declared to be against public policy, unlawful and void; provided that no agreement or association shall be deemed to be unlawful or within the provisions of this act, the object and purposes of which are to conduct operations at a reasonable profit or to market at a reasonable profit those products which can not otherwise be so marketed; provided further, that it shall not be deemed to be unlawful, or within the provisions of-this act, for persons, firms, or corporations engaged in the business of selling or manufacturing commodities of a similar or like character to employ, form, organize, or own any interest in any association, firm, or corporation having as its object or purpose the transportation, marketing, or delivering of such commodities ; . / The effect of the first proviso is that combinations, with the purposes defined in the 1st, 2nd, 3rd, 4th and 5th paragraphs of § 1, and declared thereby to be unlawful and void, are not to be regarded as unlawful if their purpose shall be to obtain only a reasonable profit in such products or merchandise as can not yield a reasonable profit except by marketing them under the combinations previously condemned. The second is like the first in declaring that it shall not be unlawful or within the condemnatory provisions of the act for persons engaged in the business of selling or manufacturing commodities of a class that can only be dealt with at a reasonable profit by such previously condemned trust methods, to employ or own interests in an association having as its object the transportation, marketing, or delivering of such commodities at a reasonable profit. . . Such an exception in the statute leaves the whole statute without a fixed standard of guilt in an adjudication affecting the liberty of the one accused. An attempt to enforce the section will be to penalize and punish all combinations in restraint of trade in a commodity when in the judgment of the court and jury they are not necessary to enable those engaged in it to make it reasonably profitable, but not otherwise. . . To compel defendants to guess on the peril of an indictment whether one or more of the restrictions of the statute will destroy all profit or reduce it below what would be reasonable, would tax the human ingenuity in much the same way as that which this court refused to allow as a proper standard of criminality in International Harvester Company v. Kentucky, 234 U. S. 216, 232, 233 [supra].”
The cases cited in support of that decision involved statutes of *603similar import. They all differ from the section 38 of article 30 - of the act of 1919, now under consideration. The first clause of that act declares: “Every insolvency of a bank shall be deemed fraudulent, and the president and directors shall be severally punished by imprisonment and labor in the penitentiary for not less than one (1) year nor longer than ten (10) years.” Standing alone this clause is sufficiently definite to meet the requirements of the constitution. It is followed immediately by this language: “Provided, that the defendant in a case arising under this section may repel the presumption of fraud by showing that the affairs of the bank have been fairly and legally administered, and generally with the same care and diligence that agents receiving a commission for their services are required and bound by law to observe; and upon such showing the jury shall acquit the prisoner.” This latter clause is not to be construed as qualifying or in any manner changing or modifying the substance of the prescribed penal offense declared in the first clause. It leaves the first clause just as it would have been if the proviso had not been enacted. The words of the proviso go no further than to declare three ways by which a defendant indicted under the first clause “may repel the presumption of fraud,” and do not purport to exclude the defendant from urging any other matter that would repel the declared presumption of fraud or disprove any evidence that the State might introduce for the purpose of sustaining the charge of fraudulent insolvency. This view comports with the construction of this clause of the statute as expressed in Snead v. State and Griffin v. State, supra. Construing the statute as indicated above, it does not violate the due-process clauses of the State and Federal constitutions on the ground of indefiniteness, as charged in the demurrer to the indictment. This ruling amounts to a concurrence in the judgment relatively to the question dealt with in the 3d division, but not in the reasoning expressed in the majority opinion. The words “affairs” as applied to a bank and “fairly” as applied to administration of the affairs of a bank, as those words are employed in the proviso, are indefinite; but as they are contained only in the proviso which states a rule of evidence, and do not modify or vary the definition of the offense as provided for in the first clause, the fact that they are indefinite does not affect the question.
3. The demurrer to the indictment, in several forms, attacks as *604violative of the due-process clauses of the State and Federal constitions the above-quoted section 28 of article 20 of the act, of 1919, on the ground that the statute makes insolvency of the bank as defined in section 5 of article 1 of the said banking act “presumptive evidence of fraud/’ whereas insolvency of the bank as defined in the statute has no reasonable relation to the fact of fraud sought to be presumed, and the statute in so declaring is purely arbitrary and opposed to the due-process clauses of the State and Federal constitutions. Section 5 of article 1 of the banking act declares: “A bank shall be deemed to be insolvent, first, when it can not meet its liabilities as they become due in the regular course of business; second, when the actual cash market value of its assets is insufficient to pay its liabilities to depositors and other creditors; third, when its reserve shall fall under the amount herein required, and it shall fail to make good such reserve within thirty (30) days after being required to do so by the superintendent of banks.” The point is made that there is no reasonable connection between the failure of a bank under all circumstances to meet its liabilities when they become due in the regular course, as provided in the first clause of said section 5 of article 1 of the act of 1919, and the presumption of fraud which the statute purports to draw therefrom. In this connection it is urged: “To be prepared to meet all of its obligations at all times when due, it would be necessary for a bank to maintain a cash reserve equal to 100 J0 of its deposits subject to check on demand, whereas the law of Georgia, in the same act, to wit, section 27 of article 19, provides that a bank need only keep 15 Jo of its demand deposits as a cash reserve, and, if a member of the Federal Reserve System, may keep even less. The said statute therefore authorizes a bank to lend out 85 Jo of its demand deposits on time loans, and yet provides, in the section under which this indictment is found, that the officers and directors are presumed guilty of fraud in the mismanagement of the bank, if more than 15 Jo of the depositors demand their money at one time, and if the bank has not maintained more than the cash reserve required by the said act.” Other reasons are urged as a basis for declaring that there is no reasonable relation between insolvency of a bank as defined by the statute, and fraudulent acts of the officers of the bank, on which to base a presumption of fraud from the mere fact of insolvency of the bank; but sufficient has been stated to illustrate the point. *605This ground of attack is well taken, and renders that part of the act violative of the due-process clauses of the State and Federal constitutions. The statute, in section 28 of article 20, refers to insolvency as referred to in section 5 of article 1. Insolvency as there defined may arise in either one of three specified ways which are designated in the statute. Section 28 does not refer alone to one of the three definitions of insolvency specified in section 5 of article 1, but in terms applies to “every insolvency,” meaning “insolvency” as described in any one of the three specified ways.
Frmd cam, not be p'esumed from acts which the■ law exp'essly authorizes. The law expressly authorizes banks to incur debt by-receiving money on deposit and lending.it out, except the amount required to be kept in reserve as provided in section 27 of article 19 of the said banking act. The money received on deposit may be payable immediately on the check or draft of the depositor. The loans made by the bank to others may be payable at future dates. If a bank thus receiving deposits lends out all its money in regular course of business, except the amount required to be kept as its reserve, it could not pay all its depositors on demand if they should demand payment at the same time. Yet in these circumstances the failure to pay all the depositors would amount to “insolvency” under the first clause of the definition of insolvency as embraced in section 5 of article 1, and raise a presumption of fraud under section 28 of article 20, notwithstanding every loan made by the bank was perfectly good and would be paid in full at maturity. In transactions of the character mentioned the bank would have been acting within its usual banking business and in the exercise of its powers as conferred by law, and there would be no reasonable relation between its acts, or so-called “insolvency,” and fraud. The scheme of the act is to draw a presumption of fraud from proof of facts which the statute expressly authorizes. This is wholly unreasonable. Lawfulness of the acts in lending out deposits to the extent authorized is incompatible with “reasonable relation” between inability to pay “on demand” and fraud — the ultimate fact-sought to be presumed. The opinion in Griffin v. State, 142 Ga. 636 (4) (supra), quoted approvingly from 37 Central Law Journal, 147, as follows: “The penal statutes are supposed to prevent fraudulent banking. They are not intended to force all banks to keej) all deposits in the vault ready for the depositor upon call. Statutes *606regulating banking expressly permit the loaning of deposits by requiring the bank to keep on hand a reserve of only 15 to 20 per cent, of their deposits. Does the legislature permit banks to loan 80 to 90 per cent, of deposits, and at the same time fix a heavy penalty for not always having the same money on hand to pay out on demand?” It was said in that case “that, within the meaning of Penal Code (1910) § 204 [substantially the same as section 28 of article 20 of the act of 1919], a bank is not insolvent if its entire property and assets are sufficient to discharge its liabilities by process of liquidation, even though it may not be able to pay its debts immediately as they become due, or to pay its depositors on demand; and that in this statute there is no difference in the meaning of the word ‘insolvency’ as applied to a chartered bank and the meaning of the word as applied to the financial condition of an individual.” Under the definition of “insolvency” as employed in the Penal Code, § 204, it was held in effect that there was reasonable relation between “insolvency” so defined of a bank and fraud, and that the law was not violative of the due-process clause of the constitutions for the several reasons assigned. It would not have been so held if the “insolvency” referred to in the statute did not mean just what it was construed to mean. It was said in the opinion: “With certain limitations, the legislature may enact that when specified facts have been proved, they shall, even in a criminal case, be prima facie evidence of the guilt of the accused, and shift the burden of proof. On this power there are limitations, the principal one of which is that the fact or facts which will raise the presumption and shift the burden of proof must have some fair relation to, or material connection with, the main fact as to which the presumption is raised. The inference or presumption from the facts proved must not be merely arbitrary, or wholly unreasonable, unnatural, or extraordinary, but must bear some reasonable relation to the facts proved.”
That decision was followed in Fordham v. State, supra, where, however, it was stated: “The decision of McFarland v. American Sugar Refining Co., 241 U. S. 79 (36 Sup. Ct. 498, 60 L. ed. 899), dealt with a statute which was construed differently from the construction placed upon Penal Code § 204 by this court in Griffin v. State, supra; and while, on the construction placed upon the different statutes, the results were not the same, there was no con*607flict of principle in the rulings in the Wo cases.” After the decisions in the Gi'iffin and Fordham cases the banking law (Acts 1919, p. 135) was enacted. Section 5 of article 1, as noted above, made a new definition of insolvency as applied to a bank comprehended by that law, which, as hereinbefore indicated, differed from the definition of insolvency as defined and applied in the Griffin and Fordham cases. Under this new definition as stated in the first clause of that section, there is no such relation between such insolvency and fraud as would authorize the statute to declare the insolvency presumptively fraudulent. In McFarland v. American Sugar Refining Co., 241 U. S. 79 (36 Sup. Ct. 498, 60 L. ed. 899), a statute of the State of Louisiana declared that “any person engaged in the business of refining sugar within this State, who shall systematically pay in Louisiana a less price for sugar than he pays in any other State, shall be prima facie presumed to be a party to a monopoly or combination or conspiracy in restraint of trade and commerce, and upon conviction thereof shall be subject to” a prescribed fine and othe.r penalties... It was held that the statute did not create a valid presumption, and that the statute was void as violative of the equal-protection and duo-process clauses of the Federal constitution. It was said in the opinion: “As to the presumptions, of course the legislature may go a good way in raising one or in changing the burden of proof, but there are limits. It is essential that there shall be some rational connection between the fact proved and the ultimate fact presumed, and that the inference of one fact from proof of another shall not be so unreasonable as to be a purely arbitrary mandate.’ Mobile, Jackson & Kansas City R. R. v. Turnipseed, 219 U. S. 35, 43 [31 Sup. Ct. 136, 55 L. ed. 78, 32 L. R. A. (N. S.) 226, Ann. Cas. 1912A, 463]. The presumption created here has no relation in experience to general facts. It has no foundation except with tacit reference to the plaintiff. But it is not within the province of a legislature to declare an individual guilty or presumptively guilty of a crime. If the statute had said what it was argued that it means, that the plaintiff’s business was affected with a public interest by reason of the plaintiff’s monopolizing it, and that therefore the plaintiff should be prima facie presumed guilty upon proof that it was carrying on business as it does, we suppose that no one would contend that the plaintiff was given the equal protection of the laws. We agree with the *608court below that the act must fall as a whole, as it falls in the sections without which there is no reason to suppose that it would have been passed.” Though the statutes are different, the principle there applied also applies to the Georgia statute involved in this case. The result of the change of the definition of insolvency as stated in Griffin v. State, supra, so as to make “insolvency” include the matter contained in the first clause of section 5 of article 1 of the act of 1919, supra, is to affect section 28 of article 20, which condemns “every insolvency”of a bank, and raises a presumption of fraud on proof of “insolvency” as defined in the act, without more, and to render section 28 violative of the due-process clauses of the State and Federal constitutions.
3. Numerous grounds of the motion for new trial relate to the admission of certain letters from banks in Florida, with reference to alleged claims by the Florida banks against the Farmers and Traders Bank for certain call-money demands. The court erred in the admission of this evidence over the objection that it was hearsay and irrelevant. Owen v. Groves, 145 Ga. 287 (6) (supra); Carrie v. Carnes, 145 Ga. 184 (6) (88 S. E. 849); Smith v. State, 147 Ga. 689 (95 S. E. 281, 15 A. L. R. 490); Aripeka Saw Mills v. Georgia Supply Co., 143 Ga. 210 (supra); Hickson v. Bryan, 75 Ga. 392; National Council v. Van Giesen, 20 Ga. App. 211 (92 S. E. 1022); Johnson County Savings Bank v. Richardson, 9 Ga. App. 466 (71 S. E. 779). The error in admitting this evidence was not harmless for the reasons stated in the fifth division of the majority opinion.'
4. Grounds 72, 77, and 78 of the motion for new trial, dealt with in divisions 7, 8, and 9 of the majority opinion, complain of the admission of the testimony of certain witnesses as to a former appraisal of certain assets of the bank that was alleged to have been rendered fraudulently insolvent. The appraisal was not made in the presence of the defendant with the opportunity of cross-examination, and the testimony of each witness as to the values declared by all of the appraisers was inadmissible over the objection that it was hearsay.
5. There is no merit in the grounds of the motion for new trial referred to in divisions 10, 11, 12, 15, 16, and 18 of the majority opinion.
6. Three of the requests to charge quoted in division 17 of the *609majority opinion, and designated as (d), (e), and (f), stated correct principles of law applicable to the case, and it was erroneous to refuse them. The charge as originally given did not refer at all to the statute of limitations; but after the case had been submitted to the jury and had been considered by them, they called for further instructions from the court upon the subject of what penalty should be imposed. The court, after giving instructions upon that point, stated to the jury: “To authorize the conviction of the defendant, the jurors should believe beyond a reasonable doubt that such insolvency of the bank was fraudulent or was brought about and caused by the criminal intention and fraudulent practice of the defendant, either alone or' in connection with and knowingly and intentionally aiding and assisting and abetting others named in the indictment; and that such fraudulent practice, if committed, was committed by the defendant within a period of four years next before the finding and return of the indictment into court.” This instruction was insufficient to cure the harmful effect of the error in refusing the requests. The defendant was entitled to have the question of limitation submitted to the jury before they had made up their minds to convict him, and it can not be said that the harmful effect had been removed by giving the instructions after the jury had determined upon a conviction.
7. Complaint is made of refusal of a request to give in charge the following: “I charge you that under the proof in this case and the law applicable thereto the asserted claim of the Bank of Mt. Dora is not a valid liability against the Farmers & Traders Bank, and should not be so considered by you in determining its solvency or insolvency.” Numerous grounds complain of the refusal of requests to charge, each identical with that just quoted, except as relating to claims of banks other than the Bank of Mt. Dora. The evidence as to each claim was of the same character, and was to the effect that each of the banks had submitted claims to the superintendent of banks for stated sums of money; but there was no evidence to prove the existence of the indebtedness for which the claims were made. In these circumstances the requested instructions should have been given, because, there being no proof of the existence of the debts upon which the claims were founded, those particular claims ought not to be considered as liabilities of the *610Farmers and Traders Bank in passing upon the question of that bank’s insolvency.
8. There was evidence of conduct upon the part of the defendant, and of other officers of the bank, which the jury might have found to have been fraudulent acts of the persons committing them, but which nevertheless did not demand a finding that they had reference to or tended to produce fraudulent insolvency of the Farmers and Traders Bank. Evidence of that character having-been admitted, and the defendant not being on trial for any separate fraud or for violation of any other statute relating to banks, but being on trial for violation of this particular statute (section 28 of article 20 of the act of 1919), relating to fraudulent insolvency of the bank, it was proper for the court to restrict the issues to a violation of this particular statute, and upon request (as shown by the majority opinion, division 20 (a)) to so instruct the jury that they would not be confused and convict the defendant because he had violated some other statute. The requested instructions quoted in the majority opinion, divisions 20 and 21, stated correct principles of law applicable to the case, and should not have been refused. The evidence brought out by the State’s witnesses would have authorized a jury to find that the Farmers & Traders Bank was not fraudulently insolvent. The defendant did not make a statement, but relied upon the evidence adduced from the witnesses introduced by the State. The case of Green v. State, 124 Ga. 343 (52 S. E. 431), cited and applied in Mann v. State, 124 Ga. 760 (53 S. E. 324, 4 L. R. A. (N. S.) 934), sufficiently states the principle that a defendant may rely on the State’s evidence to establish, if it does, his defense.
9. It is insisted by the prosecution that if any error was committed in ruling upon the admissibility of evidence or in charging the jury, as complained of in the numerous grounds of the motion for new trial, such error was not cause for a reversal, because the evidence demanded the verdict of guilty that was returned by the jury. A careful reading and consideration of all the evidence and the charge of the court in its entirety does not show that the verdict was demanded by the evidence, or that the general charge sufficiently covered the requests, or cured the defects in the portions of the charge to which exceptions were taken. The face value of the bank’s choses in action and other assets exceeded its indebted*611ness. The values of property as based on opinions of witnesses are usually questions for a jury, as also is the question of fraud.
Mr. Justice Hill concurs in this dissent.