94 F.2d 495 (8th Cir. 1938), 10998, Doherty v. United States

Docket Nº:10998.
Citation:94 F.2d 495
Party Name:DOHERTY v. UNITED STATES.
Case Date:January 29, 1938
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 495

94 F.2d 495 (8th Cir. 1938)

DOHERTY

v.

UNITED STATES.

No. 10998.

United States Court of Appeals, Eighth Circuit.

January 29, 1938

Page 496

         C. L. Baskins, of North Platte, Neb. (M. E. Crosby and Robert B. Crosby, both of North Platte, Neb., on the brief), for appellant.

         Joseph T. Votava, U.S. Atty., of Omaha, Neb. (Fred G. Hawxby, Emmet L. Murphy, and Ambrose C. Epperson, Asst. U.S. Attys., all of Omaha, Neb., on the brief), for appellee.

         Before STONE, GARDNER, and THOMAS, Circuit Judges.

         GARDNER, Circuit Judge.

         Appellant was convicted on an indictment containing fifteen counts, charging offenses under section 592, title 12 U.S.C.A. The first seven counts charged embezzlement of funds from a state bank insured under the Federal Deposit Insurance Corporation Act, 12 U.S.C.A. § 264, but not a member of the Federal Reserve System. The next four counts charged misapplication of the funds of the same bank, while the last four counts charged the making of false entries. The parties will be referred to as they were designated below.

         To each of the counts of the indictment defendant filed a demurrer, in which he challenged the constitutionality of the act as it related to state banks that were nonmember banks of the Federal Reserve System. The demurrers having been overruled, defendant entered a plea of not guilty to each of the counts. Upon trial, he was found guilty as to the third, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, and fifteenth counts, and not guilty as to the other counts of the indictment. He was sentenced to two years in the federal prison upon each of the several counts upon which he was convicted, the sentences, however, to run concurrently.

         Section 592, title 12 U.S.C.A., Rev. St. § 5209, as amended by Act of August 23, 1935, provides that any officer, director, agent, or employee of any Federal Reserve Bank, or of any member bank, or of any

Page 497

insured bank, as defined in the act, who embezzles or misapplies any of the moneys, funds, or credits of such bank, or who makes any false entires in any book, report, or statement of such bank, with intent to injure or defraud, shall be deemed guilty of a misdemeanor and punishable as in the act provided.

         Section 264, Title 12 U.S.C.A., creates 'a Federal Deposit Insurance Corporation * * * which shall insure, as hereinafter provided, the deposits of all banks which are entitled to the benefits of insurance under this section, and which shall have the powers hereinafter granted.'

         The act defines a state member bank as 'any State bank which is a member of the Federal Reserve System, and the term 'State nonmember bank' means any State bank which is not a member of the Federal Reserve System.' 12 U.S.C.A. § 264(c)(2). It provides that nonmember banks may make application for and if approved become insured banks. It provides for insuring deposits of the member banks as well as of such nonmember banks as upon application have been approved. The act appropriates $150,000,000 out of the Treasury of the United States for the payment of capital stock in the corporation, the balance of the capital stock to be subscribed and paid for by Federal Reserve banks.

         The act creating the corporation describes and enumerates its powers in great detail. Among the powers and duties enumerated and described is the power, when designated for that purpose by the Secretary of the Treasury, to 'be a depositary of public moneys, except receipts from customs, under such regulations as may be prescribed by the said Secretary, and may also be employed as a financial agent of the Government. It shall perform all such reasonable duties as depositary of public moneys and financial agent of the Government as may be required of it.' 12 U.S.C.A. § 264(n).

         The sole question presented on this appeal is that of the constitutionality of the acts under which the indictment was drawn. The grounds upon which the acts are assailed may be summarized as follows: (1) As the federal government has no general police power, the acts cannot be upheld as constitutionally valid; (2) the power to enact section 264, title 12 U.S.C.A., is not to be found among the enumerated powers of Congress; (3) state banks not members of the Federal Reserve System, though...

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