Hargreaves v. United States, 7593.

• Decision Date: 21 January 1935
• Docket Number: No. 7593.,7593.
• Parties: HARGREAVES v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

75 F.2d 68 (1935)

HARGREAVES v. UNITED STATES.^*

No. 7593.

Circuit Court of Appeals, Ninth Circuit.

January 21, 1935.

Wm. H. Neblett, H. H. MacDonald, and Harry W. Dudley, all of Los Angeles, Cal., for appellant.

Peirson M. Hall, U. S. Atty., and Robert W. Daniels, Asst. U. S. Atty., both of Los Angeles, Cal., and J. Albert Woll and Guy K. Bard, Sp. Assts. to Atty. Gen.

Before WILBUR and GARRECHT, Circuit Judges.

GARRECHT, Circuit Judge.

This case is before the court on an appeal by the defendant, Richard L. Hargreaves, from the judgment and sentence of the District Court on verdict of the jury finding said defendant guilty of violating section 5209, R. S., as amended (12 USCA § 592).

Richard L. Hargreaves and John R. Scantlin were president and vice president of the First National Bank of Beverly Hills. Hargreaves became president in 1927; Scantlin came to the bank as vice president in 1928. They continued in these offices until the bank closed in June, 1932. Hargreaves and Scantlin were the executive and managing officers of the bank, and both of them were on the board of directors and also on the executive committee, to which most of the powers of the board of directors were delegated, including that of approving loans. On August 2, 1933, the federal grand jury at Los Angeles returned a secret indictment against Richard L. Hargreaves and John R. Scantlin. This indictment contained two counts; the first for misapplication of funds in the sum of $25,000, and the second for the abstraction of stock claimed to belong to the bank. At the time of the trial, on motion of the government counsel, the second count of this indictment was dismissed.

On December 20, 1933, the grand jury returned another indictment charging Hargreaves and Scantlin in three counts with misapplication of the funds of the bank with intent to injure and defraud the bank and, in fourteen counts charging them with knowingly, willfully, and unlawfully making false entries in the reports to the Comptroller of the Currency with intent to deceive the other officers of the bank and the Comptroller of the Currency.

The two indictments were consolidated for trial. The defendant Scantlin entered a plea of nolo contendere which was accepted; defendant Hargreaves was tried alone. There were nineteen counts in the consolidated indictments. The court, at various stages of the trial, dismissed five counts. The jury disagreed on five counts and found defendant Hargreaves not guilty on one count, and returned a verdict of guilty on eight, counts 1, 3, 4, 5, 6, 9, 10, 11, 14, and 15.

When called for sentence, defendant moved for a new trial. The court set aside the verdict of the jury on counts 5 and 10 of the second indictment and sentenced Hargreaves to imprisonment for a period of three years on each of the remaining counts, 1, 3, 4, 6, 9, 11, 14, and 15, the periods of imprisonment to begin and run concurrently.

Only a statement of those counts on which the defendant was sentenced will be given here. The first count on which the defendant was found guilty was for the misapplication of $12,000 of the bank's money, which Hargreaves borrowed from the First National Bank of Beverly Hills on January 30, 1931. The loan was arranged through Mr. Bell of the Bank of America in Los Angeles, who procured one B. H. Brown, a vice president of said bank, to sign the note as an accommodation maker. The note was made to the First National Bank of Beverly Hills, of which the Bank of America was a correspondent, and at times had considerable of its money on deposit. The Bank of America issued a cashier's check for that amount payable to Brown, who was immediately asked to and did indorse the check to Hargreaves. The Bank of America charged the $12,000 against the deposit of the First National Bank of Beverly Hills. Brown received no consideration whatever for signing the note; he was merely a dummy in the transaction. The testimony shows that the First National Bank of Beverly Hills received the Brown note from the Bank of America and paid to said bank $12,000. The cashier's check for $12,000 which had been issued and indorsed by Brown was indorsed by Hargreaves and deposited to his personal credit in the First National Bank of Beverly Hills. The money was later checked out by Hargreaves and the funds withdrawn from the custody of the bank. The Brown note for $12,000 was charged off by the First National Bank of Beverly Hills as a loss on April 15, 1932. The date of the note appearing thereon was January 29, 1931. The note register of the bank does not show any guarantee by the defendant on or about January 29, 1931, when the note was executed, but the renewal note of B. H. Brown, dated August 7, 1931, was guaranteed by Hargreaves as of that date. However, the evidence shows that then the financial responsibility of Hargreaves was such that the guarantee was of no value. Brown testified that no one asked him whether he was worth the amount of the note or not, and further testified that it was a question whether he was worth it unsecured; that he never expected to pay it; and that he subsequently went into bankruptcy.

The third count charged Hargreaves with misapplying the sum of $1,000 of the bank's money, on account of a note of his own discounted at the bank on August 4, 1931. The amount of money was subsequently withdrawn from the control of the bank. At the time, Mr. Hargreaves had a very small commercial account with the bank and had drawn his salary in advance.

The fourth, sixth, ninth, and eleventh counts charged defendant with making entries in reports to the Comptroller of the Currency, which concealed from the other directors of the bank and from the Comptroller of the Currency the true condition of the bank concerning the liability of Hargreaves and Scantlin to the bank. The evidence shows that Hargreaves and Scantlin had employees of the bank and others execute notes for which the makers received no consideration, and in connection with which these signers were acting merely as dummies for the accommodation of Hargreaves and Scantlin; that upon these dummy notes the bank's money was advanced which was used to purchase stock for Hargreaves and Scantlin, or for purposes other than for the benefit of the bank. The makers of these notes did not expect to pay them; the debt to the bank was the obligation of Hargreaves and Scantlin. Neither the books of the bank nor the reports to the Comptroller revealed the true state of these transactions. Cravens v. U. S., 62 F.(2d) 261, 282 (C. C. A. 8).

Counts 14 and 15 showed false entries in two different reports to the Comptroller of the Currency in failing to disclose the ownership by the bank of 500 shares of Barnsdall Oil Company stock. It is argued on behalf of the appellant that the offenses stated in counts 4, 6, 9, 11, 14, and 15, charging false entries in reports to the Comptroller of the Currency, were barred by the statute of limitations; that the offenses, if any, were committed at the time the original entries were made in the books of the bank; that a report to the Comptroller of the Currency reflecting the conditions as actually appearing on the books did not constitute an offense; that if an offense was committed thereby, it should be held to have been committed as of the date of the entries in the books of the bank and not the date of the report.

The charge and the proof relating to these transactions show that the entries did not reflect the true relation existing between the bank and the defendant officers of the bank, and it was the unlawful intent of defendants, by means of the entries in the books of the bank and the reports based thereon, to deceive the Comptroller of the Currency. The making of any such a report is an offense separate and distinct from the offense of making an earlier false entry in the books of a bank. This was so decided in United States v. Adams, 281 U. S. 202, 50 S. Ct. 269, 74 L. Ed. 807. It follows, therefore, that offenses charged in these counts were committed the date of the report, and were not barred by the statute of limitations.

The evidence is sufficient to sustain conviction on all the counts.

Error is assigned for the failure of the court to give defendant's requested instructions, numbered 1 to 37. We have carefully examined these requested instructions, and such as contain correct statements of law were given in substance and effect. The refusal of the court to give others was not error.

A large number of errors in the instructions given by the court are assigned, and additional ones are claimed and presented which were not assigned.

It is argued most insistently that the court committed error in its instructions concerning the Brown note, in connection with which appellant was found guilty for the misapplication of $12,000 of the bank's money. The bank records show that at the time appellant had previously borrowed directly from his own bank, the First National Bank of Beverly Hills, a large sum of money. It is a fair inference from the testimony that appellant did not wish to have it appear on the bank records that the $12,000 was for him, so he resorted to the expedient of having the transaction consummated indirectly through the Bank of America, where the Beverly Hills Bank had on deposit a considerable sum of money. To conceal the fact that Hargreaves was receiving the money directly from his own bank, the following unusual methods were pursued: C. R. Bell, vice president of the Bank of America, requested Brown, who worked under him, also as an official of that bank, to sign the note for $12,000, and at the same time to indorse a cashier's check of the Bank of America for $12,000 issued to him. Brown knew nothing about the transaction, but complied with his superior's request; he received no consideration whatever therefor; no one inquired whether he was worth the...