People v. Clark
| Decision Date | 24 February 1928 |
| Docket Number | No. 17740.,17740. |
| Citation | 329 Ill. 104,160 N.E. 233 |
| Parties | PEOPLE v. CLARK et al. |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
Error to Appellate Court, Fourth District, on Error to Circuit Court, Madison County; J. F. Gillham, Judge.
Harry Clark and another were convicted of violating section 1 of the act entitled ‘An act for the protection of bank depositors,’ and judgment was affirmed by the Appellate Court (245 Ill. App. 316), and they bring error.
Reversed and remanded.Turner, Holder & Bullington, of Belleville, and H. J. Bandy, of Granite City, for plaintiffs in error.
Oscar E. Carlstrom, Atty. Gen., Jesse R. Brown, State's Atty., of Edwardsville, Merrill F. Wehinhoff, of Springfield, and I. H. Streeper, of Edwardsville, for the People.
DE YOUNG, J.
Harry Clark, Stowell Beach, and Irwin Hatridge were indicted in the circuit court of Madison county for the violation of section 1 of the act entitled ‘An act for the protection of bank depositors.’ Cahill's Stat. 1927, p. 871; Smith's Stat. 1927, p. 928. The indictment charged, in substance, that on October 31, 1922, Beach, Clark, and Hatridge were chairman of the board of directors, president and cashier, respectively, of the First State & Savings Bank of Wood River; that the bank was then insolvent and the officers named had knowledge of its insolvency; that on the same day they accepted a deposit of $294 in money from George Smith, who was not then indebted to the bank; that by reason of the bank's insolvency the deposit was lost to Smith; and that Beach, Clark, and Hatridge were guilty of embezzlement. Upon a jury trial Beach was acquitted, but Clark and Hatridge were found guilty, and the punishment of each was fixed at a fine of $142.88 and imprisonment in the penitentiary for two years. Motions for a new trial and in arrest of judgment were made and denied, and by the court's judgment Clark and Hatridge were each fined in accordance with the jury's verdicts and sentenced to the Southern Illinois penitentiary, ‘there to remain until discharged according to law.’ They prosecuted a writ of error from the Appellate Court for the Fourth District and that court affirmed the judgment. By this writ of error a further review is obtained.
The First State & Savings Bank of Wood River was organized under the State Banking Act in the year 1909 with a capital of $25,000, which was later increased to $100,000. Its business was conducted at Wood River, in Madison county. In October, 1922, Stowell Beach and Harry Clark were two of the bank's directors. Beach was chairman of the board, Clark was president, and Irwin Hatridge was cashier. On the 25th of that month E. E. Nicholson, representing the auditor of public accounts, made an examination of the bank's books which disclosed its condition as follows:
In September, 1922, the auditor of public accounts requested a verified report of the bank's condition. Such a report, denominated a ‘call report,’ is usually asked before an examination of a bank is made. The report, verified by Clark, was submitted as of the close of business on September 26, 1922, and showed that the bank's cash reserve was $30,000 in excess of the reserve shown by its books. This discrepancy was explained by the fact that the bank had issued and sent to the state treasurer three certificates of deposit for $10,000 each, but that the money had not been remitted by the state treasurer. When a bank borrows money from or seeks a deposit by the state treasurer, the bank is usually required to forward its note or certificate of deposit, with collateral security, to the treasurer for his inspection and approval before the money is remitted. The transaction represented by the three certificates was not disclosed by the bank's books, but it was included in the report as an available cash item and the certificates as a liability.
From the examination made on October 25, 1922, it appeared that the deposits aggregated $650,210.23 while the cash reserve and money due from banks amounted to $30,180.06. The item of $18,106.07, shown as due to banks, was an overdraft of its account with its correspondent, the National City Bank, in St. Louis. Items, including school warrants and other resources, shown by the bank's books had been added to the cash reserve instead of the loans and discounts or the bond account. Since the prior examination of the bank's condition, about six months before, the loans made by it had increased $145,140, while the deposits during the same period had grown slightly in excess of $91,400.
On the 25th or 26th of October the examiner, Nicholson, called a meeting of the directors of the bank. He directed their attention to the overdue notes, which at the time, including all classes of loans, aggregated $101,186.84. He dwelt upon the condition of the cash reserve, which was lower than that required by the regulations of the auditor's office, and he spoke of the danger of carrying on the bank's business with such a small amount of money. He referred to the discrepancy between the call report and the books of the bank. The examiner and the directors reviewed one hundred and five pastdue notes, twenty-one overdrafts, and seventy-two of the larger loans. Eight loans were found, aggregating over $38,000, which had been made to directors and to firms or corporations in which directors, officers, or employees of the bank were interested. The unsecured loans amounted to $300,529.21. Notes aggregating about $1,600, the directors admitted, were bad. They agreed to reduce the loans and to increase the bank's cash resources. Later a meeting was held in the office of the Alton Bank & Trust Company, in the city of Alton. Examiner Nicholson and two other representatives of the auditor's office, Directors Beach and Clark, and certain officers of local banks were present. The purpose of the meeting was to borrow money from the banks in Alton upon the assets of the Wood River bank in order to increase its cash reserve. The dangerous element in the situation was deemed to be the bank's slender cash resources, for if heavy withdrawals of deposits should be made the bank would be compelled to close. The loan sought was not consummated. Another meeting was held in Alton a day or two later, and it was then suggested that the directors raise $50,000 and deposit it in the bank in lieu of notes to be assigned to them and that an additional $50,000 be borrowed by mortgaging the bank's real property. In accordance with this plan the directors, on or prior to November 6, 1922, deposited $51,000, of which sum Clark contributed $15,000 and Beach $7,500. Clark and Beach made other deposits in the bank on or after October 31, 1922. On November 1 Clark and Hatridge resigned as president and cashier, respectively. While notes aggregating $51,000 were set aside for the directors, they were never delivered to them but were left in the bank. Collections were made upon some of these notes, but no portion of the money collected was paid to the directors. The proposed mortgage upon the bank's building and other real estate was negotiated. On November 1, Joe Slivka, a resident of Shipman, Ill., formerly employed by the bank,...
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