Cunningham v. State

• Decision Date: 30 November 1914
• Docket Number: 20
• Citation: 171 S.W. 885,115 Ark. 392
• Parties: CUNNINGHAM v. STATE
• Court: Arkansas Supreme Court

171 S.W. 885

115 Ark. 392

CUNNINGHAM v. STATE

No. 20

Supreme Court of Arkansas

November 30, 1914

Appeal from Scott Circuit Court; Daniel Hon, Judge; affirmed.

STATEMENT BY THE COURT.

W. R Cunningham was indicted for the offense of receiving money in a bank for the credit of a depositor with the knowledge that the bank was insolvent, contrary to section 1814 of Kirby's Digest. The facts are as follows:

Some time in the early part of the year 1911, I. H. Cunningham brother of the defendant, approached R. A. McEachin, cashier of the Bank of Midland, for the purpose of buying the bank. No agreement was reached on that date. The defendant was not present. I. H. Cunningham, in company with his brother, the defendant, on the 14th day of May, again approached the cashier of the bank for the purpose of buying it. The bank was organized with an authorized capital of $ 10,000, of which $ 3,312.50 had been paid. McEachin had been cashier of the bank for about four years, and during that time the bank had not made a profit but had lost about $ 1,500. The bank had on hand $ 13,200 in cash and in exchange in other banks. This was money which had been deposited in the bank. At that time the cashier of the bank explained fully to I. H Cunningham the condition of the bank, including its assets and liabilities, and the defendant was present during that conversation.

McEachin had purchased his stock in the bank from Bache & Denman former owners of it, but had not paid for it, and the stock had not been issued to him. That was also explained to Cunningham. Cunningham bought the stock of the cashier and of one Quinley at seventy-three cents on the dollar. He paid the cashier $ 1,800 for his stock and Quinley the sum of $ 475. The amount which they received for their stock was deposited in the bank to be paid to Bache & Denman with the understanding that Bache & Denman would then transfer the stock to Cunningham. Cunningham took charge of the bank as soon as the sale was made. The defendant became cashier. The defendant continued as cashier of the bank until the 22d day of July, at which time he became sick and did not thereafter have charge of the bank. On the 6th day of August, 1912, the bank closed its doors and a receiver was appointed for it. An examination of the books of the bank was made and the evidence shows that the books showing the daily balances and the condition of the bank were lost after they had been examined by the receiver. On May 15, 1912, I. H. Cunningham borrowed from the bank $ 5,000. No note was taken therefor but a memorandum was made showing that amount of money had been given to him. Among the notes found in the bank after it became insolvent were the following:

Gertrude and I. H. Cunningham, May 25, due six

months after date

$ 350

P. W. Cunningham, June 30, due January 1, 1913

500

I. H. Cunningham, August 5, due on demand

3,000

I. H. Cunningham, June 20, due January 1, 1913

1,000

I. H. Cunningham, June 5, due December 5, 1912

1,000

I. H. Cunningham, June 20, due January 1, 1913

2,000

P. W. Cunningham, July 2, due on demand

950

I. H. Cunningham, August 12, 30 days after date

1,084

The books also showed that $ 3,000 was borrowed from the bank at Fort Smith and $ 4,800 in notes was put up as collateral to secure the loan.

On the first day of July, 1912, James A. Harris, treasurer of Sebastian County, received a check on the Bank of Midland from T. A. Norris, as collector of Sebastian County, for $ 1,437.51. He mailed the check to the bank and they sent him a receipt for it, signed by W. R. Cunningham, cashier. Mr Norris had more than that amount of money to his credit in the bank and the defendant when he received the check placed it to the credit of Mr. Harris and charged it to the account of Mr. Norris. After the bank went into the hands of the receiver and an inventory was made it appears that the bank had the notes of the Cunninghams to the amount of more than $ 9,800. There was also $ 1,000 or $ 1,100 in other notes in the bank which were practically worthless, the receiver being able to collect only about $ 250 of the amount. The cash on hand was $ 10.87. There was a typewriter worth $ 50 and a bank safe worth $ 125. The desk and bank furniture were valued at $ 125. There was an adding machine worth $ 25 and a printing outfit carried on the books of the bank at $ 400 which was only worth $ 50. Other notes were also deposited in two other banks as collateral security and the value of these notes was very little more than sufficient to pay off the indebtedness for which they were put up as security.

An examination of the affairs of the bank also showed that the cashier was short more than a thousand dollars and that I. H. Cunningham signed a note for that amount. The receiver investigated the solvency of I. H. Cunningham and the latter told the receiver that he had no property and that there was a mortgage on his home.

P. W. Cunningham was the father of I. H. Cunningham, and the defendant. He also stated to the receiver that there was a mortgage on his home. The receiver also talked with other parties and made an investigation of the solvency of the Cunninghams and found that they were insolvent.

The defendant testified in his own behalf, and said that on the first day of July, 1912, he received through the mail from James A. Harris a check for $ 1,437.51, signed by T. A. Norris, tax collector; that Mr. Norris had more than that amount of money in the bank at the time, and that when he received the check he placed it to the credit of Mr. Harris and charged it to the account of Mr. Norris. He further testified that he had no interest in the bank and that the loans to his brother and father were made at the instance of I. H. Cunningham; that he took sick on July 22, and was not at the bank after that date; that, so far as he knew, the bank was in good condition on the first day of July, 1912, and that there was more money on hand at that time by several thousand dollars than there was when he went into the bank; that he kept a book of daily balances in which he entered up the checks, deposits and capital stock; that the object in keeping the book of daily balances was to show the condition of the bank each night; that he does not know where the book is now, but that it was at the bank when he became sick. Other facts will be referred to in the opinion. The jury returned a verdict of guilty, and from the judgment of conviction the defendant has duly prosecuted an appeal to this court.

Judgment affirmed.

Holland & Holland, for appellant.

Wm. L. Moose, Attorney General, and Jno. P. Streepey, Assistant, for appellee.

OPINION

HART, J., (after stating the facts).

The defendant was indicted under section 1814 of Kirby's Digest, which is as follows: "No bank shall accept or receive on deposit, with or without interest, any money, bank bills or notes, or United States treasury notes, bills or drafts, circulating as money, or currency, 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 on deposit of any such deposit, shall be guilty of a felony, and upon conviction thereof shall be imprisoned in the State penitentiary not less than three years and not more than five years."

Statutes have been enacted in a number of States making it a crime to receive deposits into a bank if it is known by the officer receiving the deposits that the bank is in an insolvent condition. The purpose of these statutes is not only to protect innocent depositors but to deter bank officials from so conducting the business of the bank as to endanger its solvency. 3 Ruling Case Law, § 117, page 490.

The word "draft" as used in the...