People v. Gould

• Decision Date: 23 October 1931
• Docket Number: No. 20250.,20250.
• Citation: 178 N.E. 133,345 Ill. 288
• Parties: PEOPLE v. GOULD et al.
• Court: Illinois Supreme Court

345 Ill. 288

178 N.E. 133

PEOPLE

v.GOULD et al.

No. 20250.

Supreme Court of Illinois.

Oct. 23, 1931.

Error to Circuit Court, Henry County; Charles J. Searle, Judge.

William E. Gould and Sam D. Burge were convicted of receiving a deposit while the bank was insolvent, and they bring error.

Reversed and remanded.

HEARD, J., dissenting.S. R. Kenworthy, of Moline, and Edward L. Eagle and J. Hays Britton, both of Rock Island, for plaintiffs in error.

Oscar E. Carlstrom, Atty. Gen., Carl A. Melin, State's Atty., of Cambridge, and Carl I. Dietz, of Springfield (Charles E. Sturtz and W. C. Ewan, both of Kewanee, of counsel), for the People.

DUNN, J.

The plaintiffs in error, William E. Gould and Sam D. Burge, seek by this writ of error to reverse the judgment of the circuit court of Henry county whereby they, being the president and cashier, respectively, of the Savings Bank of Kewanee, a bank incorporated and doing business in this state, were convicted of receiving a deposit of $440 from Louisa Ouart, not being a debtor of the bank, which was insolvent, as the plaintiffs in error well knew, whereby the deposit was lost to her. Both the defendants were found guilty by a jury, the amount of the deposit lost to the depositor was found to be $286, and the punishment of each defendant was fixed by the jury in their verdict at a fine of $572 and imprisonment in the penitentiary. The defendants were sentenced to pay a fine of $572 each, and were sentenced to imprisonment in the penitentiary from one to three years.

A motion was made to quash the indictment, which was found under the provisions of section 1 of the act of June 4, 1879, for the protection of bank depositors (Laws 1879, p. 113), as amended in 1903 (Laws 1903, p. 156). It is as follows: ‘That if any banker or broker, or person or persons doing a banking business, or any officer of any banking company, or incorporated bank doing business in this State, shall receive from any person or persons, firm, company or corporation, or from any agent thereof, not indebted to said banker, broker, banking company, or incorporated bank, any money, check, draft, bill of exchange, stocks, bonds, or other valuable thing which is transferable by delivery, when at the time of receiving such deposit, said banker, broker, banking company or incorporated bank is, in his or its knowledge, insolvent, whereby the deposit so made shall be lost to the depositor, said banker, broker or officer, so receiving such deposit, shall be deemed guilty of embezzlement, and, upon conviction thereof, shall be fined in a sum double the amount of the sum so embezzled and fraudulently taken, and, in addition thereto, may be imprisoned in the State penitentiary, not less than one nor more than three years.’ The amendment of 1903 was merely the addition of the words in italics and the omission of the last sentence in the act of 1879, which was as follows: ‘The failure, suspension, or involuntary liquidation of the banker, broker, banking company, or incorporated bank, within thirty days from and after the time of receiving such deposit, shall be prima facie evidence of an intent to defraud, on the part of such banker, broker or officer of such banking company or incorporated bank.’ As a reason why the indictment should have been quashed, it is urged that the act under which it was returned is unconstitutional, and that it has been repealed by the enactment of the Banking Act of 1887 (Laws 1887, p. 89) and the Banking Act of 1919 (Laws 1919, p. 224) as amended in 1923 (Laws 1923, pp. 158, 164).

At the time of the adoption of the Constitution of 1870, many incorporated banks existed in Illinois, some under special laws enacted by the Legislature, others under the act of 1851 to establish a general system of banking. Laws of 1851, p. 163. Most of them were incorporated as banks of issue, but, since the passage of the acts of Congress imposing a tax of 10 per cent. of the amount of all notes of any state bank paid out after July 1, 1866, they had surrendered their circulation, withdrawn the securities held in trust by the state treasurer to secure the payment of their notes, and ceased to function as banks of issue. After the passage of these acts of Congress, the Legislature by an act of March 7, 1867, repealed chapter 15 of the Revised Statutes of 1845, entitled ‘Bank Notes,’ prohibited the organization of any more banks or banking associations with power to issue notes or bills to circulate as money, and prohibited the issue of any additional circulation by the auditor to any bank or banking association then in existence in the state. Laws of 1867, p. 49. All of these banks and banking corporations, whether organized under the General Banking Law of 1851 or under special statutes, were recognized by sections 2, 5, and 7 of article 11 of the Constitution of 1870 and treated as validly organized corporations. People v. Loewenthal, 93 Ill. 191. Besides the incorporated banking associations, there were in the state many individuals and partnerships doing a banking business over whom the state exercised no supervision, and many national banks organized under the federal laws and subject to the supervision of the federal government. The act of 1851 provided in considerable detail for the security of the note holder by the deposit of securities with the state treasurer and the keeping of the amount adequate by the substitution or addition of other securities in case of depreciation of those deposited, but no special provision for the security of depositors was made except to require a full statement of the bank's affairs as of the first Monday of January, April, July and October to be transmitted to the auditor and published in the nearest newspaper. Section 5 of article 11 of the Constitution of 1870 provides that: ‘No act of the general assembly authorizing or creating corporations or associations with banking powers, whether of issue, deposit or discount, nor amendments thereto, shall go into effect or in any manner be in force unless the same shall be submitted to a vote of the people at the general election next succeeding the passage of the same, and be approved by majority of all the votes cast at such election for or against such law.’ Whether or not this section repealed the Banking Act of 1851 is not material, for that act was expressly repealed by the general repealing act of the Revised Statutes (chapter 131, § 1, par. 172), which took effect on July 1, 1874.

Thus the law stood, with no statute authorizing the organization of corporations with banking powers in Illinois, when the Thirty-First General Assembly on June 4, 1879, passed ‘An act for the protection of bank depositors.’ The first section, which as amended in 1903 has been quoted already, is the basis for the indictment in this case. This act did not authorize or create any corporation or association with banking powers nor was it an amendment to any such act. There was no such act in existence in the state of Illinois to which the constitutional prohibition could apply except the special charters granted by the Legislature before the Constitution was adopted, and these charters were in no way affected by the act. No right or duty, no power or privilege, no liability or obligation, of any incorporated bank or banking association was added to or increased, subtracted from or diminished, or in any way affected, by the law. The mutual rights of the bank and its depositors, legal or equitable, were in no respect changed by it. It acted only upon the individual ‘banker or broker, person or persons doing a banking business, or officer of a banking company or incorporated bank.’ The prohibition was to the individual. The responsibility was upon him, and his was the punishment. The plaintiffs in error in their brief state that there is no question but that the General Assembly always had the jurisdiction and power to legislate concerning private banks and that they are not in this proceeding questioning that right.

It has been observed that in 1870 the banking business of this state was conducted by many so-called private banks which were not incorporated, by a number of incorporated banks having special charters, and by some banks incorporated under the Banking Act of 1851. Any person who chose to, could become a private banker if he had a few thousand dollars of his own or could secure a few thousand dollars by borrowing or associating somebody with him as a partner who had the money. He was not required to report his assets and liabilities or the condition of his business to any one, and was not subject to the examination of any public officer as to his financial ability to respond to the demands of his depositors. Their dependence for the payment of their deposits was in the business ability, honesty, and good fortune of the banker, and too often these failed them. Failures were frequent, and they were often disastrous. Therefore in 1879 the Legislature, in the exercise of the police power, passed the act declaring the receipt of any deposit by any banker or any officer of an incorporated bank when the banker or bank was insolvent, whereby the deposit so made should be lost to the depositor, to be embezzlement, and that the banker or officer, upon conviction thereof, should be fined double the amount embezzled, and might be imprisoned in the state penitentiary not less than one nor more than three years. This act was passed not as an amendment to the Criminal Code, and not as an amendment to any act authorizing or creating a corporation with banking powers, but as an independent act to protect bank depositors by declaring certain acts of bankers or officers of banks to be crimes. It was not submitted to a vote of the people, because there was no constitutional requirement that it should be, and it became a law of the state by virtue of its passage by the Legislature and approval by the Governor.

It is within the power of ...