Cravens v. United States, 9235.
| Decision Date | 05 January 1933 |
| Docket Number | No. 9235.,9235. |
| Citation | 62 F.2d 261 |
| Parties | CRAVENS et al. v. UNITED STATES. |
| Court | U.S. Court of Appeals — Eighth Circuit |
COPYRIGHT MATERIAL OMITTED
Henry S. Conrad and C. H. Kohler, both of Kansas City, Mo. (L. E. Durham, Hale Houts, R. R. Brewster, and Forest Hanna, all of Kansas City, Mo., on the brief), for appellants.
Arch Taylor, of Salina, Kan., and H. C. Doyle, of Kansas City, Mo., for appellant Alice B. Todd.
James A. Wharton, Sp. Asst. Atty. Gen. (W. L. Vandeventer, U. S. Atty., of Kansas City, Mo., and Nugent Dodds, Asst. Atty. Gen., on the brief), for appellee.
Before KENYON, GARDNER, and SANBORN, Circuit Judges.
Appellants (herein designated as defendants) were at the time of the matters herein involved, officers of the Kansas City Joint Stock Land Bank (herein called the land bank), which was duly organized under the Federal Farm Loan Act, section 811, chapter 7, title 12, USCA, with a capital stock of $250,000. The bank passed into the hands of a receiver in 1927. Defendant Cravens was president of the bank, and defendant Alice B. Todd, secretary. Defendants, both charged as principals, were convicted upon 88 counts of an indictment charging misapplication of funds and false entries on the books of the land bank with intent to defraud and deceive. All the transactions upon which the indictment is based occurred before the receivership and while defendants were in complete charge and control of the bank.
The statute claimed to be violated is section 31, chapter 245, 39 Stat. 382 (section 984, title 12, USCA), which is as follows:
Defendant Cravens was upon the first 44 counts sentenced to five years in the penitentiary, the sentence upon each to be served concurrently. In addition, upon each of the first 15 counts he was fined $1,000. Upon counts 45 to 88 inclusive he was sentenced upon each to one year in the penitentiary, these sentences to be served concurrently, but consecutive to the sentences on counts 1 to 44, and on each of counts 79 to 88 inclusive he was fined $1,000. The total sentence therefore being six years in the penitentiary and a fine of $25,000.
Defendant Alice B. Todd was sentenced to one year and a day on each of the counts, said sentences to be served concurrently.
There were a number of corporations controlled by defendants having to do with the general situation in which one or both defendants were interested. They are as follows:
(a) The Liberty Joint Stock Land Bank of Salina, Kan., organized in January, 1918, and later, to wit, 1925, consolidated with the Kansas City Land Bank. It will be designated herein as Liberty Bank. Cravens was its president.
(b) The Cravens Mortgage Company, originally a partnership lending money on farm mortgages, comprised of Cravens and his father. It was later incorporated. It turned over its business to the Liberty Bank when it was organized, taking stock for its holdings.
(c) The Kansas City Finance Corporation (herein called the finance company) was incorporated in 1922, as an investment and loan company, dealing in bonds, stock, etc., with a capital of $750,000. It was organized by Mr. Cravens to carry on the same work as the Cravens Mortgage Company had been carrying on "of acting as the producing agent for the land bank." One-half of the capital stock was paid by delivery of 7,500 shares of the stock of the Liberty Bank at $50 per share, making the assets of the finance company presumably $375,000. This stock of the finance company was owned as follows:
V.R. Andrus, 1 share
S.C. Miller, 1 share
Alice B. Todd, 7,489 shares
These parties constituted the board of directors.
(d) The Missouri Hydro-Electric Power Company (herein called the Hydro-Electric Company), incorporated in 1924, for the purpose of maintaining and operating electric power and light plants. The capital stock was to be 500 shares of no par value, owned as follows:
Walter Cravens, 498 shares
R.W. Street, 1 share
Walter Eyssell, 1 share.
(e) Farmers Fund, Inc., organized in April, 1925, to deal in bonds, mortgages, and securities of all kinds, and to act generally as investment brokers. The capital stock was to be $100,000, 1,000 shares without nominal or par value, which the articles of incorporation recited had been bona fide subscribed. The capital stock was paid by cash in the amount of $8,984.09, and by the transfer to the company of mortgages upon real estate aggregating $91,015.91. From whence the mortgages came does not appear in the record. The shareholders and the number of shares owned were as follows:
Walter Cravens, 998 shares,
Alice B. Todd, 1 share,
R.W. Street, 1 share.
These parties constituted the board of directors.
Joint-stock land banks, authorized under section 811, title 12, USCA, are for the purpose of assisting farmers in securing long time loans at low rates of interest, the same to be repaid by amortized payments. Under the act bonds can be issued in an amount not exceeding fifteen times the capital stock and surplus, which are placed on the market and the money derived from these sales is used to make loans. The government incurs no responsibility as to these bonds, their payment being determined by the success with which the loans are made and interest collected. They are not commercial banks but are subject to certain restrictions in examinations similar to federal banks.
It does not seem to be disputed that defendants took from the bank large sums of money. In fact it is admitted in the argument. The government claims said sums were wrongfully and unlawfully taken with intent to defraud the bank, and that false entries were made on the books with the same intention. Defendants' theory is that the difficulties arising were due largely to the land deflation in Missouri and Kansas where the land bank had its loans, which commenced about 1920 and resulted in default in payment of interest and amortized assets on many mortgages and required the land bank to take over a large number of farms; that to meet this situation Cravens devised the plan of organizing the Hydro-Electric Company to develop hydro-electric power for use in St. Louis and Kansas City and other sections of the country which would require an eventual expenditure of some thirty million dollars. The project made necessary the acquisition of lands along the Osage river in the state of Missouri, which would be overflowed by the construction of a dam known as the Bagnell Dam. The lands which the land bank had taken over in Missouri and Kansas were to be exchanged for lands within the area which would be submerged by the dam, which lands the Hydro-Electric Company would be compelled to pay for in cash; that this was the purpose of organizing the Hydro-Electric Company; that a contract was entered into between the Hydro-Electric Company and the bank called the trading agreement, providing for said exchange of lands, which will be hereinafter referred to; that the moneys taken, as set forth in the first 33 counts of the indictment by defendants from the bank were used in carrying out this project in a good faith effort to benefit and not injure the bank. It is the contention of defendants that were it not for unwarranted governmental interference they would have worked out this situation to the benefit and possible salvation of the bank. Further, they contend that the original taking was entirely justified and that whatever funds they took were later restored.
We discuss, preliminary to the question of whether the evidence was sufficient to submit to the jury the various counts of the indictment, some questions of importance.
First. Were the constitutional rights of the defendants invaded by an unlawful search and seizure of property of the bank? This question was raised by plea in abatement.
Second. Was there error in empaneling the jury?
Third. Was there error in the cross-examination of defendant Alice B. Todd?
Unlawful Search and Seizure.
The indictment was returned on August 4, 1927. The plea in abatement was filed November 7, 1927. An amended plea in abatement was filed in April, 1928. The government contends these pleas came too late, neither the plea nor the amended plea stating any reason for delay. We realize that such an argument can be based on Agnew v. United States, 165 U. S. 36, 17 S. Ct. 235, 41 L. Ed. 624, but serious constitutional rights being here involved we prefer to pass on the merits of the question raised.
Three sets of circumstances are involved in the alleged unlawful search and seizure. First, that, following an invasion of the banking rooms of the Kansas City bank in December, 1925, by agents of the government holding commissions as land bank examiners and accompanied by secret service men, certain books, papers, and records of the bank disappeared, later reappeared in the files of the Treasury Department in Washington, and...
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