Appelget v. State

• Decision Date: 23 January 1926
• Docket Number: 4693.
• Citation: 243 P. 251,33 Okla.Crim. 125
• Parties: APPELGET et al. v. STATE.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Criminal Appeals of Oklahoma

243 P. 251

33 Okla.Crim. 125

APPELGET et al. v. STATE.

No. 4693.

Court of Criminal Appeals of Oklahoma

January 23, 1926

Syllabus by the Court.

Any officer, director, cashier, or manager of any bank who shall knowingly accept or receive on deposit any money, checks, or drafts or be accessory to the receiving or accepting of such deposit when such bank is insolvent is guilty of a felony.

A bank is "insolvent" within the meaning of the criminal law: First, when the actual cash market value of its assets is not equal to its debts and liabilities. Second, when it is unable by pledging its assets and credit to raise, within a reasonable time, the money to meet its debts, obligations and liabilities, and to pay its depositors in the ordinary course of business.

Section 4135, Comp. Stat. 1921, defining the conditions when a bank shall be deemed insolvent, applies only for civil purposes and has no application to the insolvency of banks in criminal prosecutions against its officers.

The books and records of a bank pertaining to its business properly identified as such, and kept under the general supervision of its managing officers, are admissible in a prosecution against them for accepting or receiving a deposit with knowledge of the insolvency of the bank; both to show the insolvency of the bank and the knowledge thereof by its officers, and to show the deposit in question was received by the bank.

Where evidence is derived from books and documents of a voluminous or technical nature, a competent witness may summarize and explain such books and records for the information of the jury. In such case a liberal right of cross-examination should be allowed.

Where the managing officers of a bank, with knowledge that it is insolvent, permit the bank to continue to receive deposits by its employees, they are guilty of accepting and receiving deposits within the meaning of the law, although they do not personally receive the deposits.

Record examined and held that documentary evidence not properly identified was admitted; that the right of cross-examination was unduly restricted; and that the court misdirected the jury in defining insolvent as used in the criminal law.

Additional Syllabus by Editorial Staff.

In prosecution of bank officers, under Comp. St. 1921, § 4128, for receiving deposit with knowledge of bank's insolvency, in view of section 4176, making it duty of bank examiner to report on condition of bank examined, and, in view of fact that report of commissioner would be admissible as primary evidence under section 654, admitting criticism made by bank examiner as to condition of bank in question on examination thereof preceding its closing as insolvent was proper.

Appeal from District Court, Alfalfa County; James B. Cullison, Judge.

J. Alan Appelget, G. L. Berry, and Harry E. Appelget were convicted of the offense of receiving a deposit in an insolvent bank, and appeal. Reversed and remanded.

A. L. Squire, of Blackwell, and Titus & Talbot, of Cherokee, for plaintiffs in error.

Geo. F. Short, Atty. Gen., and Fred Hansen, Asst. Atty. Gen., for the State.

EDWARDS J.

For convenience and brevity, the plaintiffs in error will be referred to as defendants. They were prosecuted in the district court of Alfalfa county under an indictment for receiving a deposit in an insolvent bank. The defendants J. Alan Appelget, G. L. Berry, and Harry E. Appelget were respectively president, vice president, and cashier of the Bank of Goltry, and were directors in said bank. On the 16th day of November, 1921, the bank, through one Reuben Sparks, its receiving teller, received a deposit from C. C. Clark of four checks aggregating $129.78. On the following day the bank closed. The case went to trial on November 16, 1922. The assignments of error presented may be summarized as follows: Error of the court in admitting incompetent, irrelevant, and immaterial evidence on the part of the state; error of the court in excluding competent and material evidence offered by the defendants; error of the court in his instructions to the jury.

The statute under which the prosecution was had is section 4128, Comp. St. 1921, the pertinent part of which is as follows:

"* * * No bank shall accept or receive on deposit * * * any money * * * checks or drafts, when such bank is insolvent; and any officer, director, cashier, manager, member, party or managing party of any bank who shall knowingly violate the provisions of this section, or be accessory to or permit or connive at the receiving or accepting of any such deposit, shall be guilty of a felony, and upon conviction thereof shall be punished," etc.

Section 4135, Comp. St. 1921, defines "insolvent" as follows:

"A bank shall be deemed to be insolvent, first, when the actual cash market value of its assets is insufficient to pay its liabilities; second, when it is unable to meet the demands of its creditors in the usual and customary manner; third, when it shall fail to make good its reserve as required by law."

And section 4124, Comp. St. 1921, defines the reserve required by banks to be kept, and provides that any bank which shall fail for a period of 30 days after notice from the bank commissioner to restore its lawful reserve may be deemed insolvent, and possession of it may be taken by the bank commissioner.

In order to find the defendants guilty in this case, it was necessary that the state prove by competent evidence that at the time the deposit was received the bank was insolvent, and that defendants had knowledge. This could be established only by an examination into the affairs of the bank generally and the method and manner of the conduct of the bank by defendants as going to their knowledge of its condition, since knowledge must be proven by the surrounding facts and circumstances.

Under the first assignment, it is contended by the defendants that section 4135, supra, defines "insolvent" for civil purposes only; that the test of solvency under the criminal law is to be determined by ascertaining if the value of the assets of a bank when handled by the rightful owners in the usual course of business is equal to the liabilities of the bank. If they are, the bank is solvent in so far as fixing the acts of its officers as criminal. If they are not, it is insolvent. In other words, that the term "insolvent," as used in section 4128, supra, means insolvent in the broad general sense.

It is necessary that we determine the meaning of the word "insolvent" as used in the criminal statute defining the offense charged. Section 4128. Does it mean insolvent in the broad, general sense as applied to an individual or institution whose entire property and assets, when converted into money without unreasonable haste, is insufficient to pay liabilities; that is, when the actual cash market value of its assets is insufficient to pay liabilities, and where it is not able in a reasonable time by pledging its assets and credit to obtain means to meet its debts and obligations in the ordinary course of business, or does it mean insolvent as the term is defined by section 4135, above quoted. The word is differently defined by different courts. 32 Corpus Juris, 806, 14 R. C. L. 628 (2). Our statute defining the word "insolvent" is a part of the general banking law in which all the provisions for organizing banks, creating a banking board and the office of bank commissioner, and providing for a state guaranty fund, and for the management and control of banks generally is embodied. The duties of members of the banking board and the banking commissioner are fixed. The power of the bank commissioner to close, take over, and liquidate banks under conditions stated is given. Among these powers it is provided that, when the reserve of any bank shall be below the required amount, the bank commissioner shall notify such bank, and, if the bank shall fail for a period of 30 days after notice to restore its reserve, it may be deemed insolvent, and the bank commissioner may take possession. Section 4124, Comp. St. 1921.

Upon a consideration of the entire statute, we are of the opinion that the word "insolvent," as used in section 4128 wherein it is made a crime to accept or receive deposits by an insolvent bank, is that state of being insolvent which arises when the cash market value of the assets of the bank are insufficient to pay its liabilities; or where the bank is unable to meet its obligations, liabilities, and debts, and to pay its depositors in the ordinary course of business when given a reasonable time to procure the money for such purpose by pledging its collateral and credit to meet any temporary inability or emergency, and not the state of being insolvent set out in sections 4124 and 4135. It certainly was not the legislative intent to make criminal the accepting or receiving of deposits in a bank insolvent in that technical sense in which the word is used in section 4124, where a bank may be deemed insolvent when it shall fail for a period of 30 days after notice to restore its reserve. Nor was it the legislative intent to make criminal the act of the officers of a bank to accept or receive deposits, where, by reason of some unexpected demand or the failure to receive expected remittance, the bank had failed to pay some liability in the usual and customary manner, as defined in the second subdivision of section 4135. To conclude otherwise would lead to absurd results. For instance, a bank might have assets worth much more than its liabilities, and yet by inadvertence or negligence have failed to make good its reserve or have failed to procure means to meet some unexpected demand in the usual and customary...