State v. Childers

• Court: Iowa Supreme Court
• Writing for the Court: STEVENS, J.
• Citation: State v. Childers, 202 Iowa 1377, 212 N.W. 63 (Iowa 1927)
• Decision Date: 08 February 1927
• Docket Number: 37239
• Parties: STATE OF IOWA, Appellee, v. MARGARET K. CHILDERS, Appellant

212 N.W. 63

202 Iowa 1377

STATE OF IOWA, Appellee, v. MARGARET K. CHILDERS, Appellant

No. 37239

Supreme Court of Iowa, Des Moines

February 8, 1927

Appeal from Clarke District Court.--H. H. CARTER, Judge.

Margaret K. Childers, cashier of the Woodburn Bank, was indicted tried, and convicted of the crime of accepting deposits when the bank was insolvent, and sentenced to the penitentiary for an indeterminate term of not to exceed ten years. From this judgment she appeals.

Reversed.

O. M Slaymaker and R. E. Killmar, for appellant.

John Fletcher, Attorney-general, Neill Garrett, Assistant Attorney-general, M. R. Stansell, County Attorney, and V. R McGinnis, for appellee.

STEVENS, J. EVANS, C. J., and FAVILLE and VERMILION, JJ., concur.

OPINION

STEVENS, J.

I.

The Woodburn Bank was a copartnership, composed of appellant and numerous other persons. The bank closed at the usual time for closing on the afternoon of March 14, 1925, which was Saturday, but did not open for business on Monday morning, nor at any time thereafter. On the date referred to, Nellie Sharp, who was the holder of some certificates of deposit aggregating $ 2,433.10, issued by the Woodburn Bank, presented the same for renewal, and a renewal certificate for the above sum was issued and delivered to her by the defendant. The indictment charged that the bank was insolvent when these certificates were renewed.

The original indictment charged that the defendant "did * * * accept a renewal of a deposit, * * *." The county attorney was permitted to amend the indictment so as to charge that the defendant "did * * * renew certificates of deposit * * *." Other changes in the phraseology of the indictment in no manner altered its effect. The amendment and the original indictment refer to the same certificates. The amendment was in a mere matter of form, and amounted to nothing more than a change of the phraseology to more clearly express the identical thing charged in the original indictment, and in no manner prejudiced the substantial rights of the accused. The amendment was within the provisions of Section 13744, Code of 1924. State v. Kiefer, 183 Iowa 319, 163 N.W. 698; State v. Foxton, 166 Iowa 181, 147 N.W. 347; State v. Render, 203 Iowa 329, 210 N.W. 911.

II. The defendant offered a financial statement bearing date February 17, 1923, of the financial condition of M. J. Keller, one of the partners. The defendant also sought to introduce testimony to show that certain, if not all, of the partners were solvent on March 14, 1925. The financial statement was excluded, and the offer of testimony to show the solvency of the partners refused. The exclusion of this testimony is one of the main propositions urged by appellant for reversal. It is contended in this connection that it was incumbent upon the State to allege and prove not only the insolvency of the bank, as such, but also of the individual partners. It is conceded that this contention is in conflict with the rule heretofore announced by this court. The obvious purpose of the legislature in enacting Sections 9279 and 9280, Code of 1924, was to provide for the punishment of persons engaged in the banking or other business in which deposits of money are received, who accept or receive the same when insolvent. The business of banking is one of trust and confidence, in which the deposit of money is solicited and received under an implied promise to return to the depositor its equivalent in cash upon demand. The question is not whether the assets of the parties, together with the assets of the entity, are of sufficient value to ultimately satisfy the claims of creditors in full. It is the settled rule in this state, as well as in other jurisdictions, that a bank is insolvent when it is unable to pay its depositors and other creditors in the usual and ordinary course of business. State v. Cadwell, 79 Iowa 432, 44 N.W. 700; State v. Carter, 182 Iowa 905, 164 N.W. 759; State v. Kiefer, supra; State v. Gregory, 198 Iowa 316, 198 N.W. 58; Wilkin v. State, 121 Ark. 219 (180 S.W. 512); State v. Cramer, 20 Idaho 639 (119 P. 30); State v. Myers, 54 Kan. 206 (38 P. 296); People v. Dubia, 289 Ill. 276 (124 N.E. 537).

"Actual loss to the depositor is not necessary, where the statute does not in terms require it. * * * A deposit is lost, within the meaning of such a provision, when it is not paid as required by the implied contract between the depositor and the bank, because of the bank's insolvency, and such a loss may occur although part or all of the deposit may ultimately be paid out of the assets of the bank or by its stockholders." 2 Cyclopedia Criminal Law, Section 1297.

Section 9280 of the Code of 1924 provides that:

"If any such bank * * * company * * * or person shall receive or accept on deposit any such deposits, as aforesaid, when insolvent, any owner, officer, director, cashier, manager, member, or person knowing of such insolvency, who shall knowingly * * * renew any certificate of deposit, * * * shall be guilty of a felony, * * *."

We have repeatedly held, under the foregoing section of the Code, that the burden is on the State to prove the insolvency of the bank, and also the defendant's knowledge thereof. State v. Dunning, 130 Iowa 678, 107 N.W. 927; State v. Kiefer, supra. In some jurisdictions, to prove the insolvency of a private bank, the insolvency of the parties must be established. In the jurisdictions in which this rule prevails, a partnership is not recognized as a distinct and independent legal entity, and this distinguishes the holding in such jurisdictions from the rule adopted in this state. Meadowcroft v. People, 163 Ill. 56 (45 N.E. 991); State v. Krasher, 170 Ind. 43 (83 N.E. 498); In re Application of Rovnianek, 41 Nev. 141 (168 P. 327); 2 Cyclopedia Criminal Law, Section 1294 et seq. A partnership is a legal entity in this state, and is so recognized by the statute. State v. Kiefer, supra; Winter v. Pipher & Co., 96 Iowa 17, 64 N.W. 663; Lansing v. Bever Land Co., 158 Iowa 693, 138 N.W. 833; Lutz v. Billick, 172 Iowa 543, 154 N.W. 884; Jensen v. Wiersma, 185 Iowa 551, 170 N.W. 780; National S. P. Co. v. Smith-Jaycox Lbr. Co., 183 Iowa 17, 166 N.W. 708; Brumwell & Co. v. Stebbins Bros., 83 Iowa 425, 49 N.W. 1020. Particular emphasis was given to the character of a partnership as a legal entity, in State v. Kiefer, supra. We regard the rule above stated as sound, and as finally settled in this state.

Notwithstanding our previous holding, it is strongly urged by appellant that the evidence offered of the solvency of the individual partners was admissible as bearing upon the question of appellant's knowledge of the bank's insolvency. Appellant was the executive officer of the bank, and had practically complete control and management thereof. The evidence offered by the State was amply sufficient to establish both the insolvency of the bank and appellant's knowledge thereof. Proof of these particular elements of the crime, especially the latter, usually rests upon circumstances. In Illinois, a private bank is presumed to know of its...