Dow v. United States, 922.

• Decision Date: 13 September 1897
• Docket Number: 922.
• Citation: 82 F. 904
• Parties: DOW et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

82 F. 904

DOW et al. v. UNITED STATES.

No. 922.

United States Court of Appeals, Eighth Circuit.

September 13, 1897

From the record in this case it appears that in 1893, and for some years previous thereto, Charles H. Dow was the president and Sidney B. McClurken was the receiving teller of the Commercial National Bank of Denver, Colo., and Orlando E Miller was the president of the Miller Hernia Treatment Company, the headquarters of this company being in the city of Denver. On the 18th day of July, 1893, the named bank closed its doors, and its affairs were placed in the hands of a receiver, appointed by the comptroller of the currency. Upon an examination of its books, it appeared that Miller and the Hernia Treatment Company were indebted to the bank in the sum of $125,000, or nearly so; the capital stock of the bank being $250,000. According to the testimony of O. E. Miller he began doing business with the Commercial National Bank in 1891, and it follows, therefore, that in the space of two years, he had drawn from the bank the sum of $125,000 in excess of any payments made to the bank during this period. The general mode in which the business was carried on is described in the testimony of Miller, from which it appears that during several months preceding the closing of the bank it was his daily custom to make deposits of checks signed in the name of other parties, but not in fact drawn against funds in the bank, and also to deposit checks drawn upon other banks located in Denver; or, to use the language of Miller, when giving his testimony: 'In November and December, when Eastern bills began to press, and our collections were slow, I would pay or cause to be paid off through the Commercial or some of these banks, particularly the Commercial, these outside claims, and would carry it along in a kite. During November I wanted some three or four thousand dollars that had gone beyond what we had money to deposit. Then in December it commenced to enlarge, and I borrowed money from the various brokers here, who had loaned me money before. I would carry along these amounts in a kite until it would get from five to ten thousand, then borrow the money from some of the brokers, and take the kite up. Then after a while, their loans would fall in, and I would have to pay them. Then an Eastern demand would come in, and I would give a check on the Commercial. When that reached the Commercial, I would check on the American in order to gain time; next day give the American a check on the First, the next day a check on the People's to the First, and then give a check to the People's on the Commercial, taking four or five days in rounding up that check; and as the claims came in they kept adding to the kite, and kept growing larger and larger until it reached its highest point on the 12th of May. On that day I owed the Commercial National something like $125,000, including the amount they paid through the clearing house on that date, which was $50,000. ' The evidence also shows that Miller was in the habit of depositing almost daily checks drawn by third parties, largely on the Commercial National, which, however, were not drawn against funds actually in the bank, but the same were credited up in the Miller account, which in this way was caused to show a large amount to the credit of that account, when in fact no such sum belonged to the Miller Company; and against this fictitious balance certified checks were given to Miller, and, being by him transferred to third parties, the bank was obliged to pay them.

At the May term, 1893, of the district court for the district of Colorado, three indictments, based upon the provisions of section 5209 of the Revised Statutes of the United States, were returned by the grand jury of that district against Dow, McClurken, and Miller, two of which, being numbered 1,273 and 1,301, charged the defendants with the illegal misapplication of the funds of the Commercial Bank, and the other, numbered 1,302, charged the making of false entries on the books of the bank. In the several counts-- five in number-- of the indictment numbered 1,273, Dow is charged as the principal, and the other two as aiders and abettors, and in indictment numbered 1,301, containing four counts, Dow and McClurken are charged as principals, and Miller as an abettor; and in the third indictment, numbered 1,302, containing four counts, McClurken is charged as principal, and the other two as abettors. By order of the court, indictments Nos. 1,301 and 1,302 were consolidated with No. 1,273, and the government was required to file a bill of particulars with respect to the items relied on in support of the allegations contained in the several counts charging a misapplication of the funds of the bank. At the November term, 1896, of the district court in Colorado, the consolidated indictments came on for trial before the court and jury, and a general verdict of guilty was returned by the jury, and subsequently sentences of imprisonment were entered against each of the parties hereinbefore named, and thereupon they united in suing out a writ of error, bringing the case to this court, and they now rely, for a reversal of the judgments entered, upon alleged errors in the admission and rejection of evidence, and in the instructions of the court upon the law of the case.

Charles Hartzell, George P. Steele, and Alexander McArthur, for plaintiffs in error Chas. H. Dow and Sidney B. McClurken.

E. L. Wells, M. F. Tayler, and John G. Taylor, for plaintiff in error Orlando E. Miller.

Greeley W. Whitford, U.S. Dist. Atty., and Henry V. Johnson, Special Asst. U.S. Dist. Atty.

Before SANBORN and THAYER, Circuit Judges, and SHIRAS, District Judge.

SHIRAS, District Judge, after stating the case as above, .

The principal point relied on by plaintiffs in error in support of their contention that the trial court erred in the view of the law taken by it with respect to the counts charging a misapplication of the funds of the Commercial Bank is based upon those portions of the charge wherein it was said that:

'From the first hour that he (Dow) knew of this account,-- knew that the checks drawn by Mr. Miller were false and fictitious,-- if he allowed them to be accepted in his bank, he thereby confessed his guilt, under this statute, of misapplying the funds of the bank. I say to you, gentlemen, that every check presented by Mr. Miller, whether upon this bank or any other bank, with knowledge on the part of Dow and McClurken, and with their assent, upon which he received credit in the bank, was a direct and flagrant misapplication of the funds of the bank in defiance of this law.'

The statute thus referred to, being section 5209 of the Revised Statutes, was before the supreme court for construction in the cases of U.S. v. Britton, 107 U.S. 655, 2 Sup.Ct. 512, and U.S. v. Northway, 120 U.S. 327, 7 Sup.Ct. 580, and it was therein held 'to be of the essence of the criminality of the misapplication that there should be a conversion of the funds to the use of the defendant, or some person other than the association, with intent to injure and defraud the association, or some other body, corporate or natural person. ' In the several counts in the indictments charging a misapplication of the funds of the Commercial National Bank it is averred that the misapplication was made with the intent to injure and defraud the association, meaning the national bank, and it is clear, under the ruling of the supreme court in the cases just cited, that the charges of misapplication contained in these indictments could not be made out unless it appeared that the funds of the bank had been depleted, withdrawn, or diminished

Before SANBORN and THAYER, Circuit Judges, and SHIRAS, District and Miller. The jury were instructed that the fact that Miller received credit in his account on the books of the bank for checks drawn on that bank or on other banks constituted a flagrant misapplication of the funds of the Commercial Bank within the meaning of section 5209; yet it is apparent that merely giving credit to Miller on the books of the bank for the amount of the checks did not lessen the funds held by the bank, nor in fact defraud the association, in any form. To complete a misapplication of the funds of the bank, it was necessary that some portion thereof should be withdrawn from the possession or control of the bank, or a...