Spurr v. United States

• Decision Date: 01 June 1898
• Docket Number: 502.
• Citation: 87 F. 701
• Parties: SPURR v. UNITED STATES.
• Court: U.S. Court of Appeals — Sixth Circuit

87 F. 701

SPURR v. UNITED STATES.

No. 502.

United States Court of Appeals, Sixth Circuit.

June 1, 1898

Three indictments were found against the defendant, each of which contained several counts, for violation of section 5208 of the Revised Statutes, by which it is provided: 'It shall be unlawful for any officer, clerk or agent of any national banking association to certify any check drawn upon the association unless the person or company drawing the check has on deposit with the association, at the time such check is certified, an amount of money equal to the amount specified in such check. ' By section 13 of the act of congress approved July 12, 1882, it is enacted as follows 'That any officer, clerk or agent or any national banking association who shall willfully violate the provisions of an act entitled 'An act in reference to certifying checks by national banks,' approved March 3, 1869, being section 5208 of the Revised Statutes of the United States, or who shall resort to any device or receive any fictitious obligation, direct or collateral, in order to avoid the provisions thereof, or who shall certify checks before the amount thereof shall have been regularly entered to the credit of the dealer upon the books of the banking association, shall be deemed guilty of a misdemeanor and hall, on conviction thereof in any circuit or district court of the United States, be fined not more than five thousand dollars, or shall be imprisoned not more than five years, or both, in the discretion of the court. ' The three indictments found against the defendant were consolidated and tried together. The several counts of the indictments mutatis mutandis charge that 'he, the said Marcus A. Spurr, being then an officer, to wit, the president of said the Commercial National Bank, did willfully violate the provisions of section 5208, United States Revised Statutes, and did without the consent of the bank, its board of directors and committees, willfully, unlawfully, and knowingly certify a check drawn upon said the Commercial National Bank by said company, to wit, the said Dobbins & Dazey, they, the said Dobbins & Dazey, as he, the said Marcus A. Spurr, well knew not having at said time on deposit with the said the Commercial National Bank an amount of money equal to the amount specified in said check,' etc. The several counts of the consolidated indictments charged the certification by defendant of four checks drawn by Dobbins & Dazey, between December 9, 1892, and February 13, 1893, both inclusive, on the Commercial National Bank of Nashville, Tennessee, aggregating $95,641.95. The total amount of checks of Dobbins & Dazey certified by defendant between said dates was $110,366.54.

The Commercial National Bank was organized in 1884. Defendant was president, and F.Porterfield was cashier, from its organization to its failure, March 25, 1893. The original capital stock of the bank was $200,000, which was increased from time to time to $500,000. The firm of Dobbins & Dazey was engaged in the purchase, sale, and exportation of cotton. Its financial standing and credit was excellent, but its assets consisted only of money, choses in action, and cotton on hand and in transit. On December 9, 1892, at the close of business, the individual ledger of the bank showed that Dobbins & Dazey's account was overdrawn in the sum of $64,417.97, and on that date the defendant certified that firm's check for $15,000. At the close of business December 17, 1892, Dobbins & Dazey's account was overdrawn in the sum of $51,070.65; and on that day their check for $31,000 was certified by defendant. At the close of business January 2, 1893, Dobbins & Dazey's account was overdrawn $77,515.59, and, at the close of business the next day, $38,125.84, on which day defendant, certified their check for $40,000. At the close of business February 11, 1893, Dobbins & Dazey had overdrawn their account $49,454.59 (February 12th was a holiday); and at the close of business February 13, 1893, their account was overdrawn $68,243.73. On that day defendant certified their check for $9,641.95. The evidence on the part of the government tended to show that the account of Dobbins & Dazey was continuously and largely overdrawn upon the individual ledger during the period covered by the checks certified by defendant (except one day in January, 1893, when there was a small credit balance), and that this fact was known to Porterfield, the cashier, and all the employes of the bank under him in authority. The board of directors of the bank consisted of 21 members. It had two standing committees, known as the 'Executive Committee' (of which defendant was a member), whose duties were prescribed by by-law 17, and an 'Examining Committee,' with the powers and duties prescribed by by-law 28. By-law 17 empowered the executive committee to discount and purchase bills, notes, and other evidences of debt, and to buy and sell bills of exchange, and required them to report at each regular meeting of the board of directors all bills, notes, and other evidences of debt purchased by them since their last regular report. By-law 28 made it the duty of the examining committee to examine, four times a year or oftener, the affairs of the bank, count its cash, compare the assets with the accounts of the general ledger, and ascertain if these and all other accounts were correctly kept, and whether the bank's condition corresponded therewith, and whether the bank was in a sound and solvent condition, etc., and report the result of their examination at the next regular meeting of the board. Under by-law 8, the cashier was primarily responsible for all funds, property, and valuables of the bank. Under by-law 9, the president was responsible only for such funds, property, and valuables of the bank which should come into his hands as president. Both officers were required under these by-laws, respectively, to give security for the faithful and honest discharge of their respective duties. By-law 19 provided: 'That no officer or clerk of this bank shall pay any check drawn upon it or pay out money on any order unless the drawer of such check or order shall, at the time of the presentation thereof, have deposited in the bank sufficient funds to meet such check or order.'

There was evidence tending to show that defendant had access to the books of the bank, and that he frequently made inquiries of the clerks and bookkeepers concerning various matters and accounts. The only direct testimony that defendant was informed of the state of that account at the dates of the certifications was that of Porterfield, the cashier, who testified that between November 25, 1892, and the failure of the bank, March 25, 1893, he apprised defendant that Dobbins & Dazey's account was continuously and largely overdrawn. Evidence was also received, as indicating defendant's knowledge of the state of Dobbins & Dazey's account, that defendant and Porterfield, the cashier, were each engaged in speculation in cotton futures, through Dobbins & Dazey, during the period covered by the dates of the checks certified by defendant, and that Porterfield was so engaged without furnishing any margins, and that the funds of the bank were used by Dobbins & Dazey in such speculations without the knowledge of defendant. The evidence upon these points was conflicting. Defendant was also sworn as a witness in his own behalf.

For the purpose of establishing defendant's knowledge and intent evidence was admitted to show that, in 1886 and 1887, Porterfield, with defendant's knowledge, but without the consent or knowledge of the bank, its directors or committee, used a large amount of the funds and moneys of the bank in the purchase on speculation of stocks for the joint account of himself and defendant and other persons in the name of the bank or in his (Porterfield's) name as cashier. For the same purpose, evidence was also admitted bearing on two other accounts, one opened March 12, 1889, with Herzfeld & Co., New York City, in the name of 'Frank Porterfield,' separate, and the other opened October 3, 1889, with Latham, Alexander & Co., of New York City, in the name of 'Porterfield & Spurr,' both of which were continued down to the close of the bank, in 1893, and that the defendant and Porterfield were jointly interested in the speculations indicated by those accounts during the entire period of their existence; that numerous purchases and sales of stocks, bonds, and other funds were made by them for their joint benefit on those accounts; and that large sums of the moneys and funds of the bank were used by Porterfield without securing or reimbursing the bank in such purchases, with the knowledge and consent of defendant after the accounts had been running some time (not when they were opened). There was also evidence that defendant and another director objected to opening an account with Dobbins & Dazey, on the ground that their business was understood to be large, and would require the bank to provide cash to meet the checks of the firm on Eastern drafts, secured by bills of lading, for cotton, and the bank might not always be able to provide sufficient funds to carry the account; that Dudley, the director who shared Spurr's objections to receiving the account, had been in the cotton business, and stated at the directors' meeting that Dobbins & Dazey would be likely to overdraw their account; that, when the account was accepted, the cashier was instructed by the committee, in defendant's presence, not to allow Dobbins & Dazey to overdraw their account, nor to borrow more than their line of credit, which was $30,000, and not to discount their drafts without bills of lading attached, and the cashier promised obedience to the order, and reported to Dudley several...