Court Opinion

ID: 5337383
Source: CourtListenerOpinion
Date Created: 2022-01-08 05:40:51.447522+00
Date Added: 2024-06-11T08:29:31.018786
License: Public Domain

Heffernan, J.
On February 10, 1931, the grand jury of the county of New York returned an indictment against appellant *138and Bernard K. Marcus, Saul Singer, Henry W. Pollock and Herbert Singer. That indictment charged Marcus, Saul Singer and Pollock, as directors of the Municipal Safe Deposit Company, a corporation subject to the provisions of the Banking Law, with having, on Janu'ary 13, 1930, abstracted and willfully misapplied the money, funds and property of that company, by procuring and causing such company to pay the sum of $2,009,518.45 to the Bolivar Development Corporation to enable the safe deposit company to purchase and acquire twenty-five shares of stock of the Premier Development Corporation in violation of section 305 of the Penal Law. The indictment further accused appellant and Herbert Singer, both lawyers, under section 2 of the Penal Law, with aiding, abetting, counseling and advising Marcus, Saul Singer and Pollock in the commission of the crime charged.
A severance was granted as to appellant. Upon their trials, Marcus, Saul Singer and Herbert Singer were convicted. The jury disagreed as to Pollock. Upon appeal, the conviction was affirmed as to Marcus and Saul Singer, but reversed and the indictment dismissed as to Herbert Singer (People v. Marcus, 261 N. Y. 268).
Subsequently and on November 14, 1933, judgment was rendered in the Supreme Court, Criminal Branch, New York County, convicting appellant of the crime of aiding and abetting in the abstraction and willful misapplication of the money, funds and property of the Municipal Safe Deposit Company. It is that judgment which is before us for review.
The statutes involved are Penal Law, sections 2 and 305, the pertinent provisions of which are:
“ § 305. * ' * * Any officer, director, trustee, employee or agent of any corporation to which the banking law is applicable, who abstracts or wilfully misapplies any of the money, funds or property of such corporation * * * is guilty of a felony.”
“ § 2. * * * A person concerned in the commission of a crime, whether he directly commits the act constituting the offense or aids and abets in its commission, and whether present or absent, and a person who directly or indirectly counsels, commands, induces or procures another to commit a crime, is a ‘ principal.’ ”
It is important to note that the prohibition in section 305 is aimed at officers, directors, trustees and employees of moneyed corporations, and not against any one who does not sustain such a relationship to the injured corporation. It is conceded in this case that appellant was not an officer, director, trustee, employee or agent of the Municipal Safe Deposit Company, the corporation whose property, it is charged, was misapplied. Moreover, he was not its counsel. '
*139Before discussing the questions of law involved it is necessary to give a brief résumé of the facts. Because appellant’s trial was unusually protracted, lasting as it did, nine weeks, it is impossible, without undue prolixity, to give more than the barest outline of the transaction which lead to his indictment.
The Bank of United States was organized in 1913. It started with a capital of $100,000 which was gradually increased until it reached in January, 1930, more than $25,000,000. Saul Singer was vice-president, director and chairman of the executive committee of the bank. Bernard K. Marcus was a director and also president of the institution. In 1927 Marcus, Singer and others incorporated the City Financial Corporation, of which Marcus became director and chairman of the board, and Singer president and director. In 1928 Marcus, Singer and others formed the Bankus Corporation. The Bankus Corporation acquired practically all the stock of the City Financial Corporation. Each stockholder of the Bank of United States was also a stockholder of the Bankus Corporation. Later a third company, known as the Municipal Financial Corporation, which had been affiliated with the Municipal Bank and Trust Company, was taken over by the Bank of United States and thereupon the Bankus Corporation and the City Financial Corporation absorbed the stock of the Municipal Financial Corporation. As the City Financial Corporation had been previously absorbed into the Bankus, the Bankus Corporation was the City Financial Corporation and the Municipal Financial Corporation. It owned or controlled the stock of the other two. At the same time the Bankus Corporation was owned by the stockholders of the Bank of United States. The Bankus Corporation, the City Financial Corporation and the Municipal Financial Corporation were affiliates of the Bank of United States. Marcus and Singer not only controlled and dominated these affiliates but also in large measure they directed and controlled the affairs of the bank itself.
The Municipal Safe Deposit Company, the corporation named in the instant indictment as the one whose funds were misapplied, was organized in 1924. Subsequently its stock was acquired by the Bank of United States and Marcus and Singer became directors thereof and controlled its affairs.
In January, 1930, the Bank of United States, in addition to owning the stock of the Municipal Safe Deposit Company, also owned and controlled the stock in the City Safe Deposit Company and the Colonial Bank Safe Deposit Company.
In January, 1930, the three affiliates owed the Bank of United States $12,000,000 on their unsecured notes, each corporation *140being indebted to the extent of $4,000,000. The Superintendent of Banks criticized these loans and insisted that they should be promptly reduced. The affiliates had no cash and not sufficient assets with which to liquidate their indebtedness. To meet the objections of the Superintendent of Banks a devious series of transactions were conceived. Ultimately that has been referred to in the record as the Bolivar plan, and the transaction which is the subject of attack here was adopted.
In order to obtain funds the affiliates transferred what assets they had, of a book value of $4,838,073.81, to Premier Development Corporation, a holding company controlled by Marcus and Singer, for 100 shares of its stock. The affiliates then sold the 100 shares of Premier Development Corporation to Bolivar Development Corporation, also controlled by Marcus and Singer, for the same price for which they had bought the stock. Bolivar Development Corporation then sold this stock to the three deposit companies for $8,038,073.81, or at an appreciation of $3,200,000 over the price Bolivar Development Corporation had paid therefor.
The stock was divided among the deposit companies in certain proportions. The Municipal Safe Deposit Company obtained twenty-five shares for which it paid $2,009,518.45. The other two deposit companies paid cash for their stock. The three deposit companies borrowed from the Bank of United States on their unsecured notes the purchase price of the stock. The Bolivar Company then paid to the three affiliates the purchase price of the 100 shares of Premier stock amounting to $4,838,073.81. That left Bolivar Company with a balance of $3,200,000 which it loaned to Bankus. Both the Bankus Company and the City Financial then paid to Bank of United States each the sum of $4,000,000 which they obtained in part from the sale of the Premier stock and in part from loans from their subsidiaries.
From what has been said it is obvious that the indebtedness of $8,000,000 of the Bankus and City Financial Corporations to Bank of United States was transferred to the deposit companies for no legitimate purpose of their own, but solely for the payment of the debts of the two financial corporations. Concededly this was the plan conceived and consummated by Marcus and Singer and carried out on January 13, 1930.
That brings us to the main inquiry as to appellant’s connection with this plan. As I interpret the evidence bis sole connection with the transaction was as a lawyer.
The offense of which appellant was convicted involves no moral turpitude and it is undenied that it was based on a transaction which caused injury to no one. No one lost a dollar, no one gained *141a dollar, by the transaction. Appellant was counsel for the Bank of United States, for Bankus Corporation and for City Financial Corporation, all of which were interested in the manipulation of the resources of the bank and its affiliates. He was the adviser of Marcus and Singer, the executives of these institutions. It is not denied that they presented to him the Bolivar plan. Appellant asserts that he believed the proposal to be lawful. On January 11, 1930, he advised Marcus and Singer that before anything was done in the matter the plan should be submitted to the Superintendent of Banks for his approval. It is uncontradicted that appellant’s last connection with this transaction was on that date and that his last word was that nothing should be done until the approval of the Banking Department was obtained. Nevertheless, the plan was executed on January 13, 1930, without the knowledge or consent of appellant.
Marcus and Singer of course committed the crime with which they were charged. In the Marcus case the Court of Appeals held that the two officers of the safe deposit company could commit the crime defined in section 305 of the Penal Law, if they did an act which made an ultra vires application of the money of the safe deposit company, even though they did so with an innocent purpose. For' such fiduciaries, the court held that the willfulness denounced in the statute required nothing more than conscious and not inadvertent, even though morally innocent, action. In other words, the prohibition of the statutes is aimed against those who, by virtue of their office or employment, occupy a position of trust in such institutions. Such officials and employees are plainly fiduciaries of the moneyed corporation.
The doctrine in that case should not be extended to include those occupying no relation of trust and confidence to the deposit company itself. In order for one, not an officer or employee of a moneyed corporation, to be an aider and abettor of the crime, he must have an actual criminal intent; he must be guilty of an action involving moral turpitude.
That is precisely what the Court of Appeals held in the Marcus case as to Herbert Singer. Singer, like Kresel, was charged in the same indictment as an aider and abettor. He, too, like Kresel, was not an officer, director, trustee, employee or agent of the deposit company, and was not in any trust or fiduciary relation to it. The Court of Appeals directed his acquittal as a matter of law because there was no proof of any wicked or criminal intent on his part, notwithstanding the fact that he was one of the principal actors, both in the planning and in the consummation of the forbidden act.
*142Kresel, in this case, stands in the same position as did Singer in that case, and consequently he, too, must be held guiltless, unless his connection with the transaction is tainted with a malevolent and criminal intent.
The trial court, however, erroneously charged the jury that the only intent required to be shown as to an aider and abettor was the same intent as is required in the case of a director, namely, an intent to do the prohibited act. The trial court committed serious and prejudicial error in instructing the jury that appellant could be found guilty of the crime charged, even though he were acting in perfect good faith.
There is no evidence that appellant urged or incited any one to commit any offense. The extent of his offending is that he failed to forbid his clients to proceed. He swore that he believed the plan to be within the law. The court of last resort has since held that he was mistaken. When appellant gave his advice the question was unsettled. It is worthy of note that neither the Appellate Division nor the Court of Appeals was unanimous in its construction of the law. A lawyer is not to be held criminally responsible because he honestly gives mistaken advice upon a doubtful question of law. No lawyer is answerable if he is mistaken concerning a question of law on which reasonable doubt may be entertained by well-informed lawyers. (Pitt v. Yalden,
4 Burr. 2060; Godefroy v. Dalton, 6 Bing. 460, 467; Bowman v. Tollman, 40 How. Pr. 1; Hill v. Mynatt, 59 S. W. 163; Savings Bank v. Ward, 100 U. S. 195; Campbell v. Brown, 2 Woods, 349; Byrnes v. Palmer, 18 App. Div. 1; affd., 160 N. Y. 699; Patterson v. Powell, 31 Misc. 250; affd., 56 App. Div. 624; People v. Clark, 242 N. Y. 313; Rapuzzi v. Stetson, 160 App. Div. 150; Citizens Loan, etc., Assn. v. Friedley, 123 Ind. 143; 23 N. E. 1075; Firpo v. United States, 261 Fed. 850.) In Montriou v. Jefferys (2 Carr. & P. 113) Lord Chief Justice Abbott said: “ No attorney is bound to know all the law; God forbid that it should be imagined that an attorney, or a counsel, or even a judge is bound to know all the law.”
Infallibility is an attribute of neither lawyer nor judge. And yet in this case the trial court said to the jury that appellant was conclusively presumed to know the law and that the law involved herein was plain and unambiguous. It is a silly perversion of the legal fiction that everyone is bound to know the law, to insist that, in this field of law, lawyers shall decide all questions in accordance with what the courts may ultimately hold, at the peril that the failure 'to prophesy correctly the final outcome will make them criminal accessories.
*143Appellant’s counsel criticizes the summation of the district attorney and asserts that he was permitted an unwarranted license of tongue. After careful consideration of the district attorney’s final argument it seems to us that he resorted to extraneous topics for the purpose of blinding the judgment and inflaming the passions of judge and jury. One would have to be possessed -of a boundless credulity indeed to believe that it had no prejudicial effect.
There are many things in this record which an impartial judge cannot contemplate with approbation. It is only possible to advert to a few. Although it was conceded that no one profited or lost because of the crime charged and that it had no effect on the closing of the Bank of United States, nevertheless the district attorney told the jury that the crime “ that we are concerned with * * * was committed with relation to the Bank of United States.” He referred to bankers stealing “ depositors’ money.” He pleaded with the jury to “ give a little attention to the poverty of depositors, who are mulcted by these people, and do not worry about the poverty of this defendant.” He said appellant was nothing but a “ pilot fish ” that guided “ sharks that scour the financial seas.” Kresel while nominally on trial on the charge contained in the indictment was actually on trial for the crimes of every faithless banker.
Appellant called a number of witnesses to testify to his good character, some of whom are eminent in State and nation. The district attorney made no effort to impeach them.' He referred to them, however, as “ a veritable parade of the wooden soldiers,” and as “ Bar Association pundits.” He asserted that the reason these persons came to appellant’s aid was because “ they have used him; ” “ he has been one of them; ” “ they have put him forward.”
It developed on the trial that appellant had acted as counsel in the Ambulance Chasing Investigation ordered by the Appellate Division of the First Department. In his summation the prosecutor in referring to his activities in that investigation said of appellant: “ Certainly he has his friends among the Bar Association lawyers. They have used him; he has been the bloodhound that has tracked down the little shysters, the little lawyer, the man who has done wrong. * * * He was cold, he was relentless, he was implacable, in the pursuit of the little shyster, the little ambulance chaser, the pothouse politician.” The effect of this statement was to denounce appellant for the public services he rendered. Who can doubt that this had a prejudicial effect on the jury? These incidents transpired without admonition, without rebuke, without condemnation from the trial court.
*144We must refer to the charge of the learned trial judge because ' in our opinion it is of such a character that the rights of appellant were seriously prejudiced by it. Whatever is here stated in criticism of the charge is not in any way intended as a reflection upon the ability of the learned court below, nor as in any way questioning his desire and endeavor to aid the jury fully to understand what was involved for their- decision, for it is assumed un questionably that he earnestly strove to discharge his duty in instructing the jury as he conceived his duty to be. Undoubtedly he endeavored to accord to the People and to the accused an impartial hearing. The length of the charge furnishes convincing proof of great industry and care in its preparation. Our criticism of it is that it was too prolix to be understan dable. The main charge occupied 163 pages of the printed record and more than eight hours were consumed in its delivery. The mere statement of this fact justifies the conclusion that the jurors were not clearly and concisely instructed on the issues submitted to them and as to the law applicable to the case. It seems incredible to us that twelve laymen could intelligently comprehend and apply what the court said.
I concur in what Presiding Justice Hill has written as to errors committed in the reception and exclusion of evidence.
Finally we are convinced that legal guilt was not brought home to Kresel. The evidence is insufficient to warrant his conviction. The judgment in this case is grossly wrong and a wicked perversion of justice. It not only places the stigma of a felon upon Kresel but deprives him of his liberty, his profession and his honor, for conduct without taint of moral turpitude or personal profit and for advice given in good faith in his capacity as a lawyer. It should be reversed and the indictment dismissed.
Crapser, J., concurs; Rhodes, J., concurs for reversal and dismissal of the indictment, with a separate memorandum; Hill, P. J., and Bliss, J., vote to reverse the judgment of conviction and for a new trial, with an opinion by Hill, P. J., in which Bliss, J., concurs, with a memorandum.