Ellis v. State

• Decision Date: 09 March 1909
• Citation: 119 N.W. 1110,138 Wis. 513
• Parties: ELLIS v. STATE.
• Court: Wisconsin Supreme Court

138 Wis. 513

119 N.W. 1110

ELLIS

v.STATE.

Supreme Court of Wisconsin.

March 9, 1909.

Syllabus by the Judge.

If a person deposits in a bank for his credit a check, and it is presently treated between such person and such bank as money, the former obtaining credit upon which he may, at his pleasure, draw for money, section 4541, St. 1898, is satisfied, as regards a deposit of money.

A charge in an indictment or information under such section, that a particular person deposited in a specified bank for his credit, a check on another bank and that it was received for the bank by its president, naming him, and accepted on deposit, satisfies all the essentials of such section as to an officer of a bank, in his capacity as such officer, accepting or receiving money on deposit.

In case of an officer of a bank accepting for such bank money of another to be and which is, deposited for his credit to be at his pleasure drawn on, the status of such officer as regards section 4541 of the Statutes of 1898, is thereby fixed regardless of whether the depositor owes the bank on paper, due to and which does mature shortly so as to absorb the deposit, in part, before the bank is forced to suspend.

In case of a person depositing money in a bank as against an existing overdraft, so far as it goes in discharge of such indebtedness, it is not a deposit within the meaning of section 4541, St. 1898.

The call of the statute, as regards the act constituting a criminal fraud, is a deposit such as will create a credit; the relation of debtor and creditor between the parties, or that of bailor and bailee or that of principal and agent.

Evidence of the reputation of a person as regards financial standing is relevant.

Evidence of the value of commercial paper based wholly on ignorance of the witness as to whether the maker possesses any property liable to execution, is not relevant, on the subject of the solvency of the maker.

“When the existence of a person, a personal relation, or state of things is once established by proof, the law presumes that the person, personal relation, or state of things continues to exist as before, until the contrary is shown, or until a different presumption is raised from the nature of the subject in question.”

No presumption is raised in the manner aforesaid which is materially retroactive.

Proof of insolvency at a particular time does not create a presumption that the same condition existed at any considerable time anterior thereto, nor is it evidentiary of such condition at a time very remote to that which the evidence is directed.

Proof that a person was insolvent at a particular time by means of judgments against him shown at such time to be uncollectible, is circumstantial evidence that he was insolvent six months or more prior thereto, especially in case of his having shortly after the earlier date transferred his property for the purpose of securing payment of his obligations, is not relevant.

Within reasonable limits under reasonable circumstances proof of insolvency of a person at a particular date as circumstantially bearing on like insolvency at an earlier date, is relevant.

Whether evidence of the nature mentioned in the last foregoing is relevant or not, raises, primarily, a question of competency, in which field, the decision of the trial court should not be disturbed on appeal unless clearly wrong.

In the situation suggested in the last foregoing, if the prior date under all the circumstances is too remote to permit of the circumstance of insolvency at the later date having reasonably any evidentiary significance, it is irrelevant.

In case officers of a bank are largely indebted thereto and possess property interests in a corporation to a very significant amount as compared to such indebtedness, and they convey such property to the bank on account of such indebtedness, pursuant to an understanding of long standing, the situation before the conveyance should be regarded substantially the same as that thereafter, as regards the mental state of such officers respecting the condition of the bank as to solvency.

In the situation in the last foregoing the fact that some of the officers, equally interested in the bank and the outside property mentioned, are not debtors of the bank but have, nevertheless, agreed with their associates to join in conveying such property to strengthen it as to paper on which they were not liable, creating a moral obligation, only, to so join, which obligation the other officers have good reason to suppose will be, and in fact is, redeemed, does not militate against the outside interest of such nondebtor officers being considered by the others, before the transfer, on the question of whether the bank is solvent.

The words “unsafe or insolvent” in section 4541, St. 1898, are used therein as legal equivalents.

The term “unsafe or insolvent” as used in section 4541, St. 1898, does not mean insolvent in the limited sense of inability to pay indebtedness in the ordinary course of business.

The term mentioned means insolvent in the broad general sense of a deficiency of one's assets in realizable cash available within a reasonable time, treated as an ordinarily prudent person would generally conduct his business under the same or similar circumstances, to pay his liabilities.

A bank is unsafe or insolvent within the meaning of the statute when the cash value of its assets, realizable in a reasonable time, in case of liquidation by its proprietors as ordinarily prudent persons would ordinarily close up their business, is not equal to its liabilities, exclusive of stock liabilities.

Error to Circuit Court, Eau Claire County; James O'Neill, Judge.

Jonathan S. Ellis was convicted of receiving a deposit with knowledge or good reason to know that the bank was unsafe or insolvent, contrary to St. 1898, § 4541, and he brings error. Reversed and remanded.

Writ of error to the circuit court for Eau Claire county to review a conviction for the offense of receiving money into a bank for the credit of a depositor with knowledge, or good reason to know, that the bank was unsafe or insolvent, contrary to section 4541, St. 1898.

The accused, during the time stated in the indictment, was president of the Security Savings Bank, a duly organized banking corporation under the laws of this state, located at Ashland, Wisconsin.

The indictment contained three counts, each for a violation of section 4541, aforesaid. The first was for receiving into the bank January 29, 1904, of A. L. Goodman, $125, in lawful money for his credit. The second was for so receiving February 2, 1904, a check for one thousand dollars of that value for credit of A. Donald. The third was for so receiving February 8, 1904, money and bank checks of the value of $59.65 from W. T. Briggs for his credit.

As to each alleged violation of law it was charged the accused received the deposit as president of the bank, knowing, or having good reason to know, that the bank was unsafe and insolvent.

The case was duly tried on a plea of not guilty. Questions discussed in the opinion were in due form saved for review.

The bank was duly incorporated September 10, 1903, as successor to a banking business previously conducted by a partnership composed of the accused, his brother E. H. Ellis and his sisters, Danielia Loranger and Augusta Kennedy. Prior to such date the capital was $20,000 and business was dominated by the accused, he being supposed by the public to be substantially the sole owner. In the new organization the four persons named took the stock in equal proportions, except one share taken by Ellis Kennedy, son of Augusta Kennedy.

The stock was fixed at $50,000. The corporation started business with a duly approved paid-up capital of that amount. All assets of the private bank were turned over to the new organization and it assumed the liabilities. From the time of the new organization to the time it closed February 13, 1904, by reason of general disturbed financial conditions, some special local disturbances and other causes, patrons of the bank withdrew credits to the extent of about one-third, the deposits being reduced from $162,560.97, to $107,000, or thereabouts. Prior to the day named the proprietors partially arranged to borrow on assets of the bank $35,000, thinking that amount would tide over the difficulties, but before concluding to secure the money a consultation was had with the bank examiner who, after an examination of the affairs of the bank, approved of its continuing, if, in the judgment of the proprietors, the $35,000 would so strengthen the reserves as to provide against a continuation of the reduction of deposits. Not feeling certain in that respect, the proprietors concluded to go into liquidation and the bank was closed accordingly, control of it being turned over to the bank examiner. At such time the amount of assets was $231,006.05, and liabilities other than to stockholders $108,270.46. The assets of the bank on February 3, 1904, and for a considerable period prior thereto, consisted of commercial paper around $75,000 in amount, which depended, for its value, in the main, upon responsibility of the accused, E. H. Ellis and Ellis S. Kennedy, real estate mortgage security as to Kennedy's indebtedness and a moral obligation hereafter explained as to some indebtedness of George C. Loranger. Of this paper $6,300 was the obligation of George C. Loranger, on which the accused was liable as an indorser, $1,100 was paper of one Holbrook, son-in-law of the latter, and $12,500 of E. S. Kennedy, son of Augusta Kennedy. On such day the stockholders of the bank were proprietors of the stock of the Bay City Land Company in the same proportion as they were of the stock of the bank. Danielia Loranger, one of such stockholders, had verbally promised to convey her interest in the land company to the bank to care for the indebtedness of her husband to the bank and the indebtedness of Holbrook, and all...