Adler v. United States

• Decision Date: 03 October 1910
• Docket Number: 2,049.
• Citation: 182 F. 464
• Parties: ADLER v. UNITED STATES. [1]
• Court: U.S. Court of Appeals — Fifth Circuit

182 F. 464

ADLER v. UNITED STATES. ^[1]

No. 2,049.

United States Court of Appeals, Fifth Circuit.

October 3, 1910

Charles Rosen, William Grant, E. D. Saunders, John P. Sullivan, and Gustave Lemle, for plaintiff in error.

Charlton R. Beattie, U.S. Atty., W. J. Waguespack, Asst. U.S. Atty and Milton C. Elstner, Sp. Asst. U.S. Atty.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

SHELBY Circuit Judge.

The defendant, William Adler, president of the State National Bank of New Orleans, was indicted in 82 counts for misapplication, abstraction, and embezzlement of the funds of the bank. He was tried, and the jury returned a verdict convicting him on 74 counts, to wit, counts 1, 3, 7, and 9 to 79, inclusive, all of which are for the misapplication of funds. The relevant part of the statute on which the counts for the misapplication of funds are based is as follows:

'Every president, director, cashier, teller, clerk, or agent of any association, who embezzles, abstracts, or willfully misapplies any of the moneys, funds or credits of the association * * * with intent, in either case, to injure or defraud the association or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent appointed to examine the affairs of any such association * * * shall be deemed guilty of a misdemeanor, and shall be imprisoned not less than five years nor more than ten. ' Rev. St. U.S Sec. 5209 (U.S. Comp. St. 1901, p. 3497).

1. The first count charges the defendant with the misapplication of $20,000. A condensed statement of that count will show what it is necessary to prove to secure a conviction on it. It charges that the accused, on September 23, 1907, with intent to injure and defraud, executed his promissory note for $20,000, and, as president of the bank, caused the note to be discounted by the bank, and the proceeds to be placed to his credit on the bank's books, to be thereafter withdrawn by him from the bank, and that said amount was wholly lost to the banking association. The note is set out in the count, showing it to be a demand note, secured by the pledge of 200 shares of Siempre Viva Mining Company stock. The count further charges that the note was not well secured, and that the accused was not worth the amount of the note above his other liabilities, as was well known to him at the time he directed the discount. This count, in brief, charges that Adler, by the means described, willfully, wrongfully, and unlawfully misapplied and received $20,000 of the moneys of the bank, and that the bank, by the transaction described, lost that sum. It clearly charges an offense within the statute, and, if the evidence tended to sustain the charge, it was proper to submit the question to the jury. There is no conflict in the material evidence relating to the count.

When this note was made and discounted, Adler's account was already overdrawn $18,303.80. It is not charged that there was any wrong or irregularity in the overdraft. He is not prosecuted for that. The proceeds of the discounted note, being placed to Adler's credit, canceled the overdraft, the amount of which was then represented by or included in his note, and left a cash balance of $1,146 to his credit. This sum he drew out of the bank and used before October 10, 1907. As to the overdraft of $18,303.80, the only effect of the transaction was to include it in the note, and to secure it, so far as it was secured by the collateral. As to the amount of the overdraft, the bank was in a better position than it was before the transaction. No one would claim that, as to the amount of the overdraft its position was worse. The mere change of the form of an existing indebtedness from an account to a note is not a violation of the statute. We must therefore direct our attention alone to the new credit of $1,146 which Adler obtained.

Is it true, as charged, that this sum 'was not then and there well secured, as he, the said William Adler, well knew at the time'? We do not think the evidence leaves any doubt that the collateral was sufficient security for this new credit. The record shows that there was realized on the collateral $5,000 in cash, which pays in full the new credit, and pays about $3,800 on the overdraft.

The evidence relating to the transaction described in the first count shows that the bank was not injured, but benefited, by the taking of the note and collateral for the overdraft. It is true that it extended an additional credit for $1,146; but it was well secured, and has been paid, and a further payment secured on the overdraft. The circumstances connected with the overdraft are not presented for consideration. The credit allowed by the overdraft must be presumed to be legitimate and fair till the contrary is charged.

The defendant was entitled to a peremptory instruction directing his acquittal on the first count.

2. The third count charges that on July 8, 1907, the defendant caused H. S. Renshaw, the manager of the firm of Brown & Harris, to make his individual note for $40,000, due on demand, and that the defendant, as president of the State National Bank, caused the note to be discounted by the bank, and the proceeds, $40,000, to be placed to the credit of Brown & Harris on the bank's books, of which firm the defendant was a member, and that by means of such discount the firm obtained a false credit of, and was thereby entitled to draw out, and did draw out, of the bank, the sum of $40,000, which sum was lost to the bank.

The evidence does not tend to sustain the charge that as much as $40,000 was withdrawn from the bank by the discount of the Renshaw note. The facts are that Brown & Harris' account was already overdrawn, as shown by the bank's books, in the sum of $34,753, and in a larger sum, as shown by the account as kept by Renshaw. But the evidence tended to show that, by the discount of the note, Brown & Harris obtained a new credit of $3,054, which they subsequently withdrew from the bank. A conviction could not be based upon the substitution of the Renshaw note for the overdraft of $34,753, so attention must be directed to the new credit which Brown & Harris obtained in excess of the overdraft. It is contended on behalf of the government that the defendant obtained this new credit with intent to injure and defraud the banking association, and that the sum obtained by the transaction was not secured. The defendant contends that there was no intention to injure or defraud, and that the sum was amply secured by the deposit of collateral. The evidence on this and other issues raised by this count was conflicting. There was evidence tending to show the deposit of 500 shares of Siempre Viva Mining Company stock as collateral security for the Renshaw note; but its deposit and delivery were under circumstances that made it a question for the jury as to whether or not it was really deposited as security for the note. There is much conflicting evidence in the record as to the value of the stock. The evidence that bears on the intention of the defendant in the transaction is voluminous. In some instances it is conflicting, and in others it is of facts from which different conclusions might be drawn by different minds. We do not think it would serve any useful purpose to comment at length on the evidence relating to this count. It is sufficient to say that we cannot sustain the defendant's contention that, on the record before us, he was entitled to peremptory instructions for an acquittal on the third count. The government presented sufficient evidence to have the count submitted to the jury.

3. The seventh count charges that the accused caused the Schwartz Foundry Company, a corporation in which he owned stock and was a director, to execute a note for $30,000 on August 22 1907, due four months after date, and that the accused caused the note to be discounted, and the proceeds, $29,282.50, to be placed to the credit of the Schwartz Foundry Company, and that this amount was by it drawn from the bank and was lost to the bank, and that the note was not secured, and the makers had no property out of which the amount of the note could be collected, as was well known to the accused, who had no reason to believe or expect that the note would be paid at its maturity. The count is an elaborate charge of misapplication of funds, charging the intent condemned by the statute. We find no conflict in the controlling evidence which bears on this count. From the charge it would appear that the accused had unlawfully and wrongfully contrived to make the Schwartz Foundry Company gain and the bank lose $29,282.50. The evidence, however, does not show anything of the kind. The $30,000 note on which the count is based was a renewal of a note for the same amount that had been outstanding since August 17, 1905, and had been regularly renewed every four months. It is not charged that when the first note was given, and the money or credit obtained, there was any criminality, or that Adler was in any way connected with the matter. In the transaction charged-- the giving of the last renewal note-- not a dollar was gained by the Schwartz Foundry Company or lost by the bank. At the time the note was discounted, the Schwartz Foundry Company had to their credit in the bank $1,033.95. The proceeds of the discounted note, $29,282.50, was placed to its credit, which made the amount on the books to its credit $30,316.45. The company drew its check on this fund, payable to the bank, for $30,000, and took up the old note. By the transaction the bank collected the discount on the new note, and we are unable to see that it lost a dollar. The transaction was simply the substitution of one note for another of the same makers,...