Com. v. Shilladay

• Decision Date: 18 November 1949
• Citation: 224 S.W.2d 685,311 Ky. 478
• Parties: COMMONWEALTH v. SHILLADAY.
• Court: Kentucky Court of Appeals

224 S.W.2d 685

311 Ky. 478

COMMONWEALTH v. SHILLADAY.

Court of Appeals of Kentucky

November 18, 1949

Proceeding by the Commonwealth against Louis W. Shilladay for alleged conversion of certain audit work sheets of the value of more than $20 and the property of Mrs. Patricia O'Brien Smith while acting as her agent and employee.

The Circuit Court, Jefferson County, Loraine Mix, J peremptorily instructed the jury to acquit the defendant, and the Commonwealth appealed.

The Court of Appeals, Stanley, C., certified that the peremptory instruction was proper because the evidence failed to show any criminal intent.

Carl Ousley, Jr., Louisville, Daniel Boone Smith, Harlan, Walter B. Smith, Louisville, A. E. Funk, Frankfort, Guy E Dickinson, Frankfort, for appellant.

Wm. S Heidenburg, Louisville, W. Clark Otte, Louisville, Luther M Roberts, Louisville, for appellee.

STANLEY Commissioner.

The Commonwealth alleges error to its prejudice in the judgment entered on a peremptory instruction to acquit the appellee, Louis W. Shilladay, on a charge of converting to his own use property of another and asks the certification of the law. Sec. 337, Cr. Code of Practice.

The indictment, brought under KRS 434.220, accuses the appellee and five other public accountants with having 'unlawfully, fraudulently and feloniously converted to their own use' certain audit work sheets of the value of more than $20, the property of Mrs. Patricia O'Brien Smith, while acting as her agents and employees. Shilladay alone was tried.

Mrs. Smith had brought suit in the United States District Court against the administrators of the estate of her late first husband, John A. O'Brien, to recover of them in their individual capacity $820,000 for malfeasance or negligence in selling his interest in the firm of Edward J. O'Brien and Company and its subsidiaries. It was charged that the interest which she acquired under his will was sold for $380,000 when it was worth at least $1,200,000. See O'Brien v. O'Brien, 294 Ky. 793, 172 S.W.2d 595, certiorari denied 321 U.S. 767, 64 S.Ct. 518, 88 L.Ed. 1063, a suit which was in part to rescind the contract; also Smith v. Louisville Trust Company, 308 Ky. 189, 213 S.W.2d 987, relating to the settlement of the estate. Mrs. Smith had obtained an order of the United States District Court permitting her to have an audit made of the affairs of the O'Brien Companies for use in the prosecution of her suit. She first employed Edward J. Wirotzious, a certified public accountant, of Memphis, to make the audit. He had done considerable work before February, 1948, when he informed Mrs. Smith that he would be unable to complete it in time for the trial of the case, which had been set for May 5, 1948. He turned over to Mrs. Smith all his auditing work sheets and received $6,422 for his service. It was contemplated that he would testify on the trial of the case. Mrs. Smith then engaged the Arthur Young Company, a firm of public accountants of Chicago. The written contract provided, among other things, that their report would be submitted to Mrs. Smith by April 25 in order that a copy of the audit could be placed in the hands of opposing counsel by the 28th, a week before the trial. This contract was made with James M. Groves, a member of the partnership who is included in the indictment herein. Mr. Shilladay was the Louisville representative of the firm and was placed in charge. The other men indicted were accountants assisting in the work. There had been discussions between Mrs. Smith and Mr. Groves about what use could be made of the work sheets prepared by Mr. Wirotzious. Groves believed they might be of some use, and he advised Mrs. Smith it would be necessary to obtain Mr. Wirotzious' consent. He wrote the Young Company on February 23 outlining his previous employment and reasons for its severance. The letter stated, 'I herewith turn over to your company all of the work sheets we have completed since January 19, 1948, so that no time has been or will be lost by Mrs. Smith in employing your company to finish this job for her.' Mrs. Smith signed an endorsement on the letter relieving Mr. Wirotzious and his firm from all responsibility under their contract. There is no reference in this letter to any return of the papers. However, Mr. Wirotzious testified he had given the papers to Mrs. Smith and relinquished his control over them.

It is provided in the statute relating to public accountants that, 'All statements, records, schedules, working papers, and memoranda made by a certified public accountant or public accountant incident to or in the course of professional service to clients by such certified public accountant or public accountant, except reports submitted by a certified public accountant or public accountant to a client, shall be and remain the property of such certified public accountant or public accountant, in the absence of an express agreement between the certified public accountant or public accountant and the client to the contrary.' KRS 325.420.

Mrs. Smith's testimony is that she had an oral agreement not only with Mr. Wirotzious but with the Young Company, that none of the work sheets or papers should be taken out of Louisville. She testified that the Wirotzious papers, under an express agreement, were to be and had become her individual property. Mr. Wirotzious' testimony is that at the beginning it had been agreed that the papers would remain Mrs. Smith's until after the trial of the case, and when that was over, the accountants could have the papers back if they wanted them. Thus, it was an open question whether the papers charged to have been converted were in fact the property of Mrs. Smith as charged in the indictment.

The testimony as to the act charged to have been a criminal conversion is that in the afternoon of April 6, 1948 Shilladay had taken the Wirotzious papers and all his own work sheets to Chicago without having notified his client and that the four associate accountants were preparing to leave that night by train. Upon learning this, Mrs. Smith had...