Court Opinion

ID: 5193354
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:39:36.288428+00
Date Added: 2024-06-11T08:26:58.007418
License: Public Domain

O’Brien, J. :
The defendant was indicted and convicted under section 528 of the Penal Code, which provides : “ A person who, with.the intent to deprive or defraud the true owner of his property, or of the use and benefit thereof, or to appropriate the same to the use of the taker, or of any other person, * * * having in his possession, custody or control, as a bailee, servant, attorney, agent, clerk, trustee or officer of any person, association or corporation, or as a public officer, or as a person authorized by agreement or by competent authority to hold or take such possession, custody or control, any money, property, evidence of debt or contract, article of value of any nature or thing in action or possession, appropriates the same to his own use, or that of any other person other than the true owner or person entitled to the benefit thereof, steals such property and is guilty of larceny.”
If the prosecution made out a prima facie case of felonious appropriation of the money of the plaintiff while acting as “ bailee,” “ agent ” or “ trustee,” we would not be justified in interfering with this verdict, because if we assume that a favorable inference from the testimony given in support of the defense would lead to a different conclusion, there would be a question for the jury. Leaving out of consideration the evidence given on behalf of defendant, we must take alone that given on behalf of the prosecution for the purpose of determining whether or not a prima facie case of guilt was established. Taking the story of the complainant, it appears that he wished to speculate in stocks and wheat under the direction of the defendant, who was in business and trading under the name of J. G. Stewart & Co. Hot being a member of an exchange, his business consisted in getting customers, and when the defendant secured the account of Yon Zeibel, he directed him to make the checks, which were intended to be deposited as margins, to the order of W. B. Smith & Co., which was a reputable firm and members of an exchange, and with whom the defendant, under the title of J. G. Stewart & Co., did business. Yon Zeibel deposited two checks, one for $300 and the other for $250, with Smith & Co. to the credit of J. G. Stewart & Co. As against Smith & Co., Yon Zeibel had no claim. The checks having been deposited to the account of Stewart & Co., that firm, or rather the defendant, who, *232on the retirement of Stewart, was the firm, had the control of the moneys in the account with Smith & Co. The attempt was made to show that this was a special deposit and that the money placed with Smith & Co. remained the money of Yon Zeibel, and there was some evidence tending to show that during the six days this account was running it represented only Yon Zeibel’s transactions.
We think, however, that the prosecution failed to establish any agreement or arrangement under which the defendant was to deposit the money in a special account as the money of Yon Zeibel. On the contrary, we think the evidence shows that the deposit with Stewart & Co. was just the same, no-other or different than if it had been actually made with the defendant as a broker. We fail to find, therefore, that the property mentioned in the indictment was received in a fiduciary capacity or under directions which made it the subject of embezzlement. The transaction, assuming the evidence of the prosecution to be true, was that the complainant was to deal with the defendant’s firm as his brokers, and whether the defendant mingled the funds of You Zeibel with those of other customers, or, having no other customers, had merely this money deposited to his credit with Smith & Co., it does appear that it was in his general as distinguished from a special account, and thus the elements which would be essential to preserve the ownership of Yon Zeibel in the special fund or money are wanting.
This, we think, becomes clearer if we eliminate Smith & Co. and assume that the money was actually deposited with the defendant and by the defendant placed in his general account in a bank. Or assume that the defendant received from Yon Zeibel instead of checks cash, and placed it within his money drawer, and, while there, it was stolen, would it have been the money of Yon Zeibel or would it have been money for the loss of which the defendant would have to respond ? Or suppose that he had taken the money to his bank and had obtained a certificate of deposit for the amount in his own name, and, while holding it, the bank failed, would not the defendant, and not Yon Zeibel, be the loser, assuming that both were financially responsible ?
Quite analogous, we think, is the case of People v. Paine (35 Misc. Rep. 763) wherein the court in discharging the defendant on habeas corpus said: “ In the present instance the $167 placed in the *233hands of the defendant by the complainant made him the debtor of the latter to that amount and gave the depositor the right to recover by civil action a return of the deposit or to call upon the defendant for an accounting. * '* * The complaint fails to set forth any charge of which a criminal court has jurisdiction, and the attempt to make a criminal offense of the transaction looks like an effort to use the criminal courts as a means of enforcing an obligation, the remedies respecting which belong exclusively to the civil courts established for the purpose.” And in People v. Howe (2 T. & C. 383, 387) which was the case of an insurance agent who had collected from policyholders sums of money and who was charged with embezzlement for failure to pay a balance due, it was said: “ It has, therefore, been held, where the party receiving the money has a, right to mix it with his own, being accountable for a balance, * * * that an indictment for embezzlement does not lie upon a misappropriation. However morally wrong it may be for a party to use money for his own benefit, which he is bound to pay over to another, it is not a criminal offense so long as it is a mere debt, no. matter of how sacred a nature.”
, We have not overlooked the fact to which our attention has been called that the scope of section 528 of the Penal Code is extremely broad and that the crime of embezzlement which prior to the enactment of the Penal Code extended merely to agents and servants (see 2 R. S. 678, § 59), has been made to include fraudulent appropriation by bailees and trustees. It was not, however, the intention of the Legislature to change the nature of the transaction itself and where therefrom it appears that the relation of debtor and creditor exists, the crime of larceny or embezzlement cannot arise from a failure of the debtor to pay.
The indictment here charges the larceny of $685.32, which was the exact amount of the check received by the defendant closing the account between Stewart & Co. and Smith & Co. To support the indictment of embezzlement it was essential for the prosecution to establish that the fund came into the hands of the defendant as the agent, bailee or trustee of Von Zeibel. We do not think, however, that it can be said that the check for $685.32 was the property of the complainant. It was the balance due from the firm of Smith & Co. to Stewart & Co.; and were it not for the suggestion that *234Stewart & Go. had no other customer and had no other funds in that account (which is not made clearly to appear) there would be nothing from which the inference could be drawn that this money was in any sense the property of the complainant.
Considering the nature of the transaction between the parties, we fail to discover any relation between them other than the ordinary one that exists between a broker and a customer. Where, as here, money is deposited with a broker for margins which when deposited loses its identity as the money of the depositor and which it is proper for the broker to place in his general account in a bank or with another broker to be used the same as he uses his other money employed in his business, the right of the depositor to the specific money is lost and he cannot claim that the broker has received such money in a fiduciary capacity.
We think that it would be going further than any adjudicated case and further than any construction extending the scope and purpose of section 528 of the Penal Code should go, to conclude that the facts proven would justify a conviction for larceny. Were it otherwise then in every case where a customer deposits money with a broker to be used by him generally in his business, the failure of such broker to return the deposit together with what might have been realized in the shape of profits upon the speculation would leave him open to the charge of having embezzled his customer’s money. We do not think it was the intention of the Legislature, nor is it the reading of the provisions of the Penal Code, that any such radical departure should be made so as to change a transaction 'that has always been regarded as establishing the relation of debtor and creditor into one which would place the broker in the position of a trustee who receives money in a fiduciary capacity which he is obliged at all times to keep separate and apart from his own moneys and on demand return upon pain of indictment and conviction for embezzlement.
. Our conclusion, therefore, is that this judgment must be reversed and a new trial ordered.
Yan Brunt, P. J., Patterson, Ingraham and McLaughlin, JJ., concurred.
Judgment reversed and new trial ordered.