Commonwealth v. Anthony
| Decision Date | 06 July 1940 |
| Citation | 28 N.E.2d 542,306 Mass. 470 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | COMMONWEALTH v. H. HENRY ANTHONY & another(and eighteen companion cases). |
April 1, 1940.
Present: FIELD, C.
J., DONAHUE LUMMUS, & QUA, JJ.
Larceny. Stockbroker.
Embezzlement. False Pretences. Conspiracy.
Evidence, at the trial of an indictment charging a member of a firm of stockbrokers with larceny, in substance that the defendant obtained a loan of securities from a customer by means of representations that the financial condition of the firm was sound so that the transaction would not jeopardize the safety of the securities, whereas he knew the firm was financially unsound, and that through the transaction the customer was deprived of the securities, warranted a conviction of the crime of larceny by false pretences under G.L. (Ter. Ed.) c 266, Section 30.
Evidence, that certain customers paid cash to a firm of stockbrokers employed generally as their agent to purchase certain securities shortly before the firm failed, that the securities never were delivered nor the cash returned, and that upon failure of the firm no money or securities available for distribution to those customers existed, warranted a conviction of a member of the firm who had direct supervision of the office of the crime of embezzlement under G.L. (Ter. Ed.) c. 266;,
Section 30, but did not warrant a conviction thereof of a second member of the firm who was the "outside man" of the firm and was not shown to have participated in the unlawful act.
Conviction of either of two partners charged with a conspiracy to commit larceny was not warranted where, while guilt of one defendant of larceny was shown, there was no evidence warranting a finding that the other in any way participated therein.
Use for the general purposes of a stockbrokerage firm of money collected and to be kept "intact" for the specific purpose of payment in advance for stock of a corporation which was to be formed to succeed the firm but which never was formed warranted a conviction of a partner who actively participated therein of the crime of larceny by embezzlement under G.L.
(Ter. Ed.) c. 266, Section 30, but did not warrant conviction thereof of a second partner who, while he knew of and approved of the incorporation of the partnership, did not further participate in such sales or in the use of the proceeds thereof.
INDICTMENTS, found and returned on April 20 and 21, 1938. The cases were heard by Broadhurst, J.
T. B. Shea, for the defendant Forgrave. S. S. Stoneman, for the defendant Anthony.
E. O. Proctor, Assistant Attorney General, (A.
V. Sullivan, Assistant Attorney General, with him,) for the Commonwealth.
These are nineteen indictments, some of which are for larceny, and some of which are for conspiracy to steal, against two partners H. Henry Anthony and William M. Forgrave, who had been carrying on a general stockbrokerage business under the firm name Brown, Anthony and Company. Each defendant has filed a separate bill of exceptions. In each case the only question that has been argued in connection with either bill is whether there was any evidence warranting the finding of guilty.
For convenience the cases will be divided into three classes, which will be considered successively, although all statements as to evidence and as to permissible findings are applicable, so far as pertinent, to all the cases.
1. We begin with a single indictment in three counts, alleging respectively that the defendants did steal certain described certificates of stock, certain pieces of paper, and $36,786.25 in money, all alleged to be the property of Marguerite A. R. Holmes. The indictment concludes with the statement that the charges in all counts "are different descriptions of the same act." On this indictment Forgrave only was found guilty.
There was evidence tending to show these facts: In December, 1936, Forgrave told one Finn, an employee of the firm, that if Mrs. Holmes, who had been Finn's "customer," would put up her securities, then in the firm's possession for safe-keeping, as collateral so that "they" could borrow $20,000 on them Forgrave would give Mrs. Holmes four per cent interest. Finn asked Forgrave whether the loan was "absolutely safe," and Forgrave said it was. Finn then explained the proposition to Mrs. Holmes, telling her that "the securities would not be disturbed." On January 14, 1937, Finn brought Mrs. Holmes to Forgrave. Forgrave told her that the money was "absolutely safe"; that "everything" was absolutely safe and secure; that she need not worry; that her "securities would be kept intact." He gave Mrs. Holmes a firm check for $20,000, which she indorsed and turned back to him. He then gave her a note for $20,000 at four per cent interest, payable in one year, and signed "Wm. M. Forgrave Partner Brown Anthony & Co." Later the check was credited to the account of the firm, and its amount was credited to Forgrave's "capital account" in the firm of Brown Anthony and Co. On January 14, Mrs. Holmes also signed a "margin card," which it could be found turned her account with the firm from a "cash account" into a "margin account" and thus rendered her securities available to be pledged for loans of the firm. Commonwealth v. Hull, 296 Mass. 327 , 331, 333. Mrs. Holmes never received her securities or their proceeds, although she demanded them. She testified that she understood she was giving authority to Brown, Anthony and Company to borrow on the securities, but did not think they would sell any, because Forgrave said the securities would be kept intact; that she understood Brown, Anthony and Company were the borrowers; that Finn told her that the note handed to her was a partnership note; that she looked at it at the time, but did not notice that it was signed by Forgrave as partner of Brown, Anthony and Company; that "it all didn't sink in"; that she was not aware of the usual firm signature; that she went into Forgrave's office; that "there was a conversation there that this margin card was perfectly safe"; that this conversation was between Forgrave and herself, with Finn present; that Finn said "he could make . . . [her] extra money by signing the margin card"; that she said, ; that he replied, "there were no chances to be taken"; that she said, "That doesn't mean that you are going to sell my securities?" and he answered, About that time Mrs. Holmes indorsed each of her stock certificates. These were afterwards pledged to banks as collateral for loans to the firm and most of them were sold by the banks to satisfy the loans.
Forgrave testified that the firm was to pay both interest and principal on the $20,000 note. It is difficult to reconcile his explanations of the form of the transaction. One of them was that the firm must first lend to Mrs. Holmes the $20,000 which she in turn immediately lent to him "for the use of the firm." He "assumed" that Mrs. Holmes knew that the note was not a partnership note.
There was evidence that at the time of the Holmes transaction the firm of Brown, Anthony and Company was in declining circumstances, and that securities used as collateral for its obligations were not "safe" and might not be kept "intact" and were in serious danger of being sold and lost, and that Forgrave knew the condition of the firm. There was evidence that as early as August, 1936, Forgrave had been informed by an accountant that an audit showed that if the firm was pressed on all its commitments at one time, it would have difficulty in meeting its obligations. There was evidence that the net worth of the firm, exclusive of good will, as shown by the books as of January 1, 1937, was only about $7,000; that efforts were being made to get new money into the business; that there was discord between the partners; that the loss sustained in operation up to June 29 was $77,000; and that on the date last mentioned the firm made an assignment for the benefit of its creditors.
There was much evidence to the effect that Mrs. Holmes had indorsed the check and received the note immediately before the statements hereinbefore mentioned were made to her by Forgrave. But the judge was not obliged to take the view that the transaction was fully completed and the check and note finally delivered before the statements were made. From the testimony of Finn in connection with the nature of the statements themselves the judge could find that the transaction did not become a finality until after Forgrave's statements were made, and that these statements were made for the purpose and had the effect of removing the lingering doubt in Mrs. Holmes's mind and so resulted in pushing the matter to a conclusion. Moreover, the judge could find that, before Finn brought Mrs. Holmes in to sign the papers, Forgrave had made, in answer to an inquiry by Finn, a false statement as to the safety of the proposed loan on Mrs. Holmes's securities with the expectation and intent that Firm should make a similar representation to Mrs. Holmes, and that in consequence Finn did represent to her that her "securities would not be disturbed."
It could be found that these representations as to the financial condition of the firm and as to the safety of the securities were more than mere expressions of opinion or prophecies as to the future, and that they amounted to statements of present fact. They were made by a partner, presumably, and as could be found actually, familiar with the underlying facts upon which the...
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