Austin v. Neiman

• Decision Date: 13 March 1929
• Docket Number: (No. 969-5107.)
• Citation: 14 S.W.2d 794
• Parties: AUSTIN, Commissioner, v. NEIMAN et al.
• Court: Texas Supreme Court

Page 794

14 S.W.2d 794

AUSTIN, Commissioner, v. NEIMAN et al.

(No. 969-5107.)

Commission of Appeals of Texas, Section B.

March 13, 1929.

Error to Court of Civil Appeals of Tenth Supreme Judicial District.

Action by Charles O. Austin, Commissioner, against Robert A. Neiman and another. Judgment for defendants was affirmed by the Court of Civil Appeals , and plaintiff brings error. Reversed and rendered.

Frazier & Averitte, of Hillsboro, and Spencer & Rogers, of San Antonio, for plaintiff in error.

J. E. Clarke, of Hillsboro, and Joe W. Hale, of Waco, for defendants in error.

LEDDY, J.

This is a suit by the state banking commissioner, as statutory receiver of the First State Bank of Malone, an insolvent bank, against Robert A. Neiman, former bookkeeper and assistant cashier of said bank, and the Maryland Casualty Company, to recover upon a fidelity bond in the sum of $2,000 given by Neiman to protect the bank against misapplication, wrongful abstraction, and embezzlement of its funds during the course of his employment.

In a trial by the court without the intervention of a jury, judgment was entered denying plaintiff in error a recovery on the bond, and this judgment was affirmed by the Court of Civil Appeals.

The undisputed evidence showed that S. E. Lowe, the bank's president, pleaded guilty to embezzlement of the bank's funds on several charges, and served a term in the penitentiary. The suit against Neiman was predicated upon the fact that he, as bookkeeper, aided and assisted Lowe in wrongfully converting the bank's funds by so keeping the books as to keep them in balance, notwithstanding the fact that $40,000 of its liabilities to its customers were removed from the books over a period of several months and placed in a dummy ledger, during which time the said Lowe abstracted $40,000 in cash belonging to the bank, and appropriated it to his own use and benefit.

By proper assignment plaintiff in error complains of the judgment of the trial court denying a recovery on the bond of Robert A. Neiman because the uncontradicted evidence showed that he kept the individual ledger and placed on the general ledger from time to time the daily totals of the individual deposits and overdrafts reflected by the individual ledger, which said totals corresponded with the totals on the cash book, and it was physically impossible for some 50 to 75 individual ledger sheets representing total deposits of approximately $40,000 to get out of the individual ledger without his knowledge, consent, and assistance.

A careful consideration of the record convinces us that this assignment should be sustained. It appears that the scheme through which Lowe was enabled to embezzle more than $40,000 of the bank's funds was by means of what is termed a "dummy" ledger. This ledger was composed of a group of individual ledger sheets or accounts of various depositors in the bank which had been removed from the live and current ledger, so that the total sum of the bank's deposits had been decreased $40,000. Notwithstanding the removal of these sheets, it appears that the books of the bank were so kept that the total of the individual deposits was carried forward on what was known as the general ledger, in a sum less the amount represented by the $40,000 which was in the dummy ledger. Neiman was the bank's bookkeeper, and kept the individual ledger, which contained the sheets from which the sheets composing the dummy ledger had been removed. It seems that, when a ledger sheet was taken from the active ledger, the amount of the customer's balance on the sheet so removed was taken in cash by Lowe, the president of the bank.

Upon the trial Neiman admitted that he took what is called a "long shot" every 2 weeks or 30 days. By that is meant that he took the sum total of all the balances of all individual deposits as shown by the active ledger in order to ascertain whether or not the amount of the individual deposits as carried on the bank ledger corresponded with the amount of individual deposits as reflected by the total sum of all the individual personal accounts. It is not disputed that, when a sheet was removed from the individual ledger and placed in the "dummy," it would necessarily be discovered by the bookkeeper the next time he took a long shot, for the reason that the total sum of all his deposits would be as much less the amount carried on his general ledger as the sum of the removed sheets; that is to say, if a sheet was removed containing an account with a balance of $1,000, when he took a long shot, he would run out $1,000 short of his general ledger, and thereby would be put upon notice that a $1,000 sheet was misplaced.

We think it conclusively shown that the sheets composing the dummy ledger were not all removed at the same time, but that they were removed over a period of several months. The general ledger was in Neiman's individual handwriting, and it never at any time showed a decrease in deposits of $40,000. There was only a few thousand dollars decrease at any one time, but there was shown a gradual decline in deposits for about 2 years prior to the date the bank was closed. When the dummy ledger was discovered in the vault after the bank was closed, it contained sheets covering individual accounts totaling more than $40,000, which, when added to the deposits of $60,000, shown by the general ledger ran the deposits up to their former standard of approximately $100,000.

Defendant in error Neiman testified as a witness, denying any personal knowledge of the dummy ledger until after the bank was closed. He admitted, however, that he kept the individual...