Kingsbury v. State

• Decision Date: 20 April 1925
• Docket Number: Criminal 592
• Citation: 28 Ariz. 86,235 P. 140
• Parties: VIOLA C. KINGSBURY, Appellant, v. STATE, Respondent
• Court: Arizona Supreme Court

235 P. 140

28 Ariz. 86

VIOLA C. KINGSBURY, Appellant, v. STATE, Respondent

Criminal No. 592

Supreme Court of Arizona

April 20, 1925

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgement reversed.

ON REHEARING

(For former opinion, see 27 Ariz. 289, 232 P. 887.)

Mr Samuel White and Mr. Robert McMurchie, for Appellant.

Mr John W. Murphy, Attorney General, and Mr. A. R. Lynch, Mr Earl Anderson and Mr. E. W. McFarland, Assistant Attorneys General, for the State.

OPINION

LOCKWOOD, J.

This matter is before the court on a petition for rehearing. The facts are stated in the previous opinion of the court reported in 27 Ariz. 289, 232 P. 887, and need not be repeated here.

Counsel for defendant set up five propositions. The fourth and fifth of these raise questions which were considered on the original presentation of the case, and we see no reason for departing from our views previously expressed thereon. The third presents anew the main contention in the original argument, to the effect that, on a charge of this kind, it is necessary to both allege and prove a loss to the bank.

It is urged that a holding, that every unauthorized use of the funds of a bank is criminal, would "make a criminal of every bank officer . . . in bestowing gifts upon the poor . . . or supporting a hospital." In view of the alarmingly prevalent attitude of some bank officers, to the effect that the trust funds of a bank are the private property of the officers, to be used for their personal benefit, and at their whim, it might be well if such were the law. We did not, however, so hold. Our ruling was that, when a certain use was positively prohibited by statutory law, it was ipso facto a misapplication of the funds of the bank for its officers to permit that use, but we also stated such use would not alone constitute such a crime, but there must also exist an intent on the part of the officers to defraud the bank thereby.

Counsel for defendant express great alarm at the decision of this court to the effect that it is not absolutely and conclusively bound by the decisions of another court construing statutes of its jurisdiction, whose substance we have adopted in Arizona, when such decisions are, in our opinion, not in accord with sound logic or fundamental principles of common sense and justice, and confess their utter inability to assure any citizen of the safety of life, liberty and property under such a rule.

We feel that they are unduly alarmed. The great commonwealths of Wyoming, Texas, Colorado, Michigan, Montana, Utah, Mississippi, Missouri and many others have long held this doctrine, and we have yet to learn that life, liberty and property are more unsafe therein than elsewhere in our country. Nor do we believe that the foundations of society will rock if counsel are compelled, in view of this decision, to advise their clients who may engage in the banking business that notwithstanding the federal decisions, they may not, with intent to defraud their respective banks, use trust funds in a manner positively prohibited by law.

We appreciate what counsel state in regard to the importance of the federal decisions, and the rule of taking any statute with the construction placed on it within the jurisdiction from which it came, but we feel it of even greater importance, that when our legislature has passed a law to meet a prevalent evil, a logical construction of that law and one best calculated to remedy that evil should be adopted. We see no reason to recede from the position previously taken on this point.

The other two propositions raise points not before presented by counsel in their brief, or not considered by us in our original decision, and we feel they should be examined carefully.

The first is, that section 19, chapter 31, Session Laws of 1922, was not operative at the time of the alleged offense, by reason of the provision of section 67 of the same act. Section 19 reads in part as follows:

"The total liability to any banking corporation of any person . . . for money borrowed shall at no time exceed twenty-five per centavo of the amount of the capital stock paid in and of the surplus earned and set aside as a surplus fund of such bank."

Section 67 reads:

"Any banking corporation . . . which banking corporation is in existence at the date of the passage of this banking act shall have three years after the provisions of this act shall have become effective, to comply with the provisions of this banking act regarding its loans and investments."

It is argued that the provisions of section 67 permit a bank to make loans to any amount to one person, up to June 30, 1925, provided only that on July 1, 1925, the loans are reduced to 25 per cent of the capital stock and surplus. In other words, that while the legislature recognized that allowing one person to become indebted to a bank, in excess of 25 per cent of its capital stock and surplus, was an evil so great as to require a law to correct it, yet it deliberately approved of an unlimited increase of future loans for three years, without any apparent reason therefor, and strictly limited such privilege of increase to banks already in existence, while rigidly prohibiting it to newly organized banks.

If, on the other hand, we interpret section 67 to mean that the existing banks -- obviously the only kind which could at the time have had loans in excess of 25 per cent -- are given three years to bring their present loans down to the limit provided for in section 19, while, so far as new loans are concerned, all banks existing or to exist are governed by section 19, we have a meaning which meets the evil recognized by the legislature, without undue hardship to present debtors, by a violent contraction of existing loans. Such interpretation is equitable, and in accord with common sense, and is adopted by us as the true meaning of the act.

The second point is that the law prohibiting any individual from becoming indebted to a bank in excess of 25 per cent of its capital and surplus applies only to money borrowed, and not to other classes of indebtedness, and, since it is not alleged in the indictment that the indebtedness of the Arizona Cattle Company was for money borrowed, no public offense was stated therein. As we said, this point was not called to our attention until the petition for rehearing, and we therefore -- as it now appears unwarrantedly -- took it for granted without independent investigation that the pleader had, since his whole case was obviously based on a violation of section 19, supra, correctly used the language of that section. It is apparent, of course, now that our attention is directed to the section, that the inhibition was expressly directed only against an indebtedness "for money borrowed" and not for any other purpose. It is equally clear that while the indictment alleges an indebtedness in excess of 25 per cent of the capital stock and surplus, it nowhere states in terms that the indebtedness was for money borrowed. Does it so state by implication? If the only way in which one could become indebted to a bank were for "money borrowed," it might well be argued the allegation of indebtedness carried with it such implication, but there are at least two other ways in which such indebtedness might readily arise. One is for property purchased from the bank, and the other is on notes and bills discounted.

Under the express provisions of the statute, discounts are excepted from its terms, and an indebtedness for the purchase price of property, not being for money borrowed, is equally without them....