People v. Bain, 22526.

• Citation: 195 N.E. 42,359 Ill. 455
• Decision Date: 03 April 1935
• Docket Number: No. 22526.,22526.
• Parties: PEOPLE v. BAIN et al.
• Court: Supreme Court of Illinois

359 Ill. 455

195 N.E. 42

PEOPLE

v.BAIN et al.

No. 22526.

Supreme Court of Illinois.

Feb. 15, 1935.

Rehearing Denied April 3, 1935.

Error to Second Branch, Appellate Court, First District, on Error to Criminal Court, Cook County; John M. O'Connor, Judge.

John Bain and others were convicted of a conspiracy, and, to review a judgment of the Appellate Court which affirmed the conviction (274 Ill. App. 215), they bring error.

Reversed and remanded.Harry Olson, Sanford Olson, and John H. Rogers, all of Chicago, for plaintiffs in error.

Otto Kerner, Atty. Gen., Thomas J. Courtney, State's Atty., of Chicago, J. J. Neiger, of Springfield, and John T. Gallagher, of Chicago (Edward E. Wilson, Henry E. Seyfarth, and Edwin J. Raber, all of Chicago, of counsel), for the People.

PER CURIAM.

John Bain, his sons, John H. Bain and Robert A. Bain, his son-in-law, W. Merle Fisher, and Frank A. Mulholland and Walter H. Buhlig, were jointly indicted in the criminal court of Cook county for conspiracy. The defendants were arraigned and pleaded not guilty. Mulholland and Buhlig were granted a severance, and on the trial testified in behalf of the prosecution. The defendants were allowed to withdraw their pleas and made a motion to quash the indictment, which was overruled. They then filed a motion, supported by affidavit, praying for a bill of particulars. Although no order was entered on this motion, a bill of particulars was furnished them. Thereafter the defendants renewed their pleas of not guilty and waived a trial by jury. The court found them not guilty as to the twenty-seventh to the fiftieth counts, inclusive, charging conspiracy to receive deposits when they knew twelve banks designated in those counts to be insolvent, and guilty as charged in the remaining forty-nine counts of the indictment. The court sentenced John Bain to from one to five years' imprisonment in the penitentiary, and fined John H. Bain, Robert A. Bain, and W. Merle Fisher $1,000 each. Upon a writ of error the Appellate Court for the First District affirmed the judgment. Subsequently the defendants prosecuted a writ of error from this court, and the record is submitted for a further review.

The indictment consists of seventy-three counts. Of these, the first charges, the defendants with conspiracy to wrongfully obtain by false pretenses $13,000,000 in money from the public generally, contrary to the statute. The sum specified was the approximate amount of the aggregate deposits of the banks named in the indictment on June 9, 1931. The second count makes the same charges as being ‘contrary to the law.’ The third count charges the defendants with conspiracy to unlawfully obtain money and property in the sum of $3,000,000 from the stockholders, depositors, customers, and creditors, and persons about to become such, of the West Englewood Trust & Savings Bank by false pretenses, contrary to the statute. This amount represented the aggregate par value of the stocks of the banks of the day previously named. By counts 4 to 14, inclusive, substantially the same charges are made as in the third count, except the Chicago Lawn State Bank, the Stony Island State Savings Bank, the West Highland State Bank, the Chatham State Bank, the Auburn Park Trust & Savings Bank, the West Lawn Trust & Savings Bank, the Armitage State Bank, the Ridge State Bank, the Brainerd State Bank, the Elston State Bank, and the Bryn Mawr State Bank, respectively, are named in the successive counts in the place of the West Englewood Trust & Savings Bank. The fifteenth count charges that John Bain was, and had been for a long time, the president and a director of the West Englewood Trust & Savings Bank; that John H. Bain was, and had been, an officer of the bank and an assistant of the president, performing certain powers and duties as president; that W. Merle Fisher was, and had been, the cashier and a director of the bank, and that Buhlig was, and had been, a director of the bank and the chairman of its discount and finance committee. It is further charged that the defendants unlawfully conspired to buy, discount, and purchase, or cause to be bought, discounted, and purchased, for and on behalf of the bank, from the defendants, and from firms and corporations which they controlled or in which they were interested, notes, real estate mortgages, and real property at exorbitant, extortionate, and excessive prices, and to thereby defraud the bank, contrary to the law. Although this count charges that Robert A. Bain and Mulholland conspired as officers and agents of the bank, there is no allegation that either held any official connection with the bank. The sixteenth to the twenty-sixth counts, inclusive, are the same as the fifteenth, except the eleven other banks previously named, respectively, are named in the respective counts in the place of the West Englewood Trust & Savings Bank. In no one of these eleven counts is it alleged that all of the defendants were connected with the bank in question. The fifty-first count charges the defendants with conspiracy, some as officers of the West Englewood Trust & Savings Bank, and others individually, to cheat and defraud the bank and to induce it to make excessive unsecured loans to persons insolvent or approaching insolvency, and to make or cause to be made to themselves, as officers and agents of the bank, or to companies in which they were interested, excessive loans when they or the companies were insolvent, and thereby to injure and defraud the bank of its funds, money, and property, contrary to the law. Charges similar to those in the fifty-first count are made in the fifty-second to the sixty-second counts, inclusive, except the eleven other banks, respectively, are named in the place of the West Englewood Trust & Savings Bank. The sixty-third count charges certain named defendants, as officers and agents of the West Englewood Trust & Savings Bank, with conspiracy to procure fraudulent, bad, and desperate loans to be made by the West Englewood Trust & Savings Bank to its officers or salaried employees without first having the loans approved, as to either amount or security, by the board of directors of the bank. Counts 64 to 73, inclusive, make charges similar to those in the sixty-third count, except that ten of the eleven other banks, respectively, are named in these counts in the place of the West Englewood Trust & Savings Bank.

It will be observed that the forty-nine counts upon which the defendants were found guilty fall into three groups, the first consisting of the first fourteen counts; the second, counts 15 to 26, inclusive, and also counts 51 to 62, inclusive; and the third, counts 63 to 73, inclusive.

The record is voluminous, consisting of more than 10,000 pages, and the abstract more than 800 pages. More than 100 witnesses testified for the prosecution. Each of the defendants testified in his own behalf, and more than 70 witnesses testified for them. The bill of particulars charged conspiracy with respect to numerous real estate bond issues, trusts, and corporations other than the banks named in the indictment. From the evidence it appears that John Bain entered the banking business in 1906, and for six years thereafter conducted a private bank. It was incorporated as the West Englewood Trust & Savings Bank in 1912. Nine years later he participated in the organization of the Chicago Lawn State Bank. The Stony Island Savings Bank was taken over by a group of business men in the vicinity of that bank in 1923. During the same year, Bain, together with a group of local business men, organized the West Highland State Bank. In 1925, the Chatham State Bank and the Auburn Park Trust & Savings Bank were taken over by two different local groups. The West Lawn Trust & Savings Bank was organized by a group of local business men in 1927. The following year the Armitage State Bank was taken over by a group of local business men, and the Ridge State Bank was organized by another group. The Brainerd State Bank was also organized in 1928. In 1929 the Elston State Bank and the Bryn Mawr State Bank were taken over by groups of local business men. The affairs of each of these twelve banks were managed by a board of directors ranging from eleven directors of the Auburn Park Trust & Savings Bank to twenty-one for the West Englewood Trust & Savings Bank. The four defendants were not all members of the board of any one of the twelve banks, nor did they own a majority of the stock of a single bank. Of the four defendants, only John Bain was a director of each bank. W. Merle Fisher, his son-in-law, was a member of the directorate of four banks, John H. Bain, a son, of five, and Robert A. Bain, another son, of two. The total number of individuals serving as directors of the various banks was 117. Each of these twelve banks voluntarilyclosed on June 9, 1931. In October, 1929, the aggregate deposits of the twelve banks was approximately $28,000,000. Heavy withdrawals during the remainder of 1929, the succeeding year, the first five months of 1930 and in the week preceding the closing of the banks, reduced the total deposits to approximately $12,800,000 on June 9, 1931. On that day the capital, surplus, undivided profits, and reserves of the banks amounted to about $6,500,000. As the deposits declined different classes of loans would exceed the requirements of the auditor of public accounts, especially real estate bonds and mortgages. According to the testimony adduced, it became necessary for the twelve banks in question to reduce such accounts. To that end John H. Bain called upon and explained to the managers of the respective real estate departments the necessity of calling in some bonds and exchanging others in their place. In like manner where a bank held part of a mortgage he pointed out the advisability of effecting exchanges.

For many years prior to and including 1929 the erection of buildings in Chicago and elsewhere was financed...