State v. Parker

• Citation: 151 A. 325,112 Conn. 39
• Court: Supreme Court of Connecticut
• Decision Date: 31 July 1930
• Parties: STATE v. PARKER et al.

151 A. 325

112 Conn. 39

STATE v. PARKER et al.

Supreme Court of Errors of Connecticut.

July 31, 1930

Appeal from Superior Court, New Haven County; Isaac Wolfe, Judge.

Information for embezzlement against John E. Parker and others, tried to the jury. Verdict and judgment of guilty and appeal by each of the accused.

Error and new trial ordered.

WHEELER, C.J., dissenting in part.

The first twenty-six counts of the information are substantially identical in form and each alleges that on a specified date and for a long time prior thereto, the defendants, John E. Parker, Clarence V. Smith, and Paul M. Smith, were officers and directors of the Parker-Smith Company, a corporation organized under the laws of the state of Connecticut and having its principal place of business in New Haven; that on the specified day this company, of which Parker and the Smiths were the officers and directors and acted for and on behalf of the company, was the trustee of an express trust, created by a certain mortgage deed from a named mortgagor to the company, by deed described by reference, the trust being for the benefit of certain persons named in the information and divers other persons, holders of mortgage notes set forth in the mortgage deed; that the defendants, " acting as officers and directors of the said Parker-Smith Company, trustee, did then and there receive and take into their possession, care and custody, for and on account of the said [named persons] and sundry other persons holders of mortgage notes as set forth in the mortgage deed," a specified sum, and afterward the defendants, " acting as officers and directors of the Parker-Smith Company, did unlawfully appropriate to their own use said sum being the property of the named persons and other holders of the mortgage notes," with the felonious intent then and there to defraud. In support of these counts the state offered evidence that, as to each, the Parker-Smith Company made loans, taking notes, of $100, $500, and $1,000 each, aggregating the amount of the loan, secured by mortgage to the company as trustee. The notes were then sold to the public. In fifteen of the cases covered by these counts, when the company received payment of the principal, the money was deposited as a segregated account, designated by the name of the mortgagor, in a bank other than those in which the company kept its general deposit accounts. Afterward, from time to time, these deposits were withdrawn, wholly or in part, by check signed by Clarence V. Smith, the treasurer, or Paul M. Smith, the secretary, and deposited in the company's general bank account, usually to meet overdrafts. In the other eleven cases, the money received in payment of principal was not so segregated, but was deposited directly in the company's general account. In most instances, part of the note holders were paid from time to time but, as to the holders named in the information, the fact that payment had been made to the company was unknown to them, and the notes held by them had not been paid. On May 29, 1929, when a receiver for the company was appointed, there was due to holders of notes, on mortgages that had been so paid, a total of $121,800. The cash on hand and in bank on that day amounted to $2,950.32.

The remaining nine counts of the information (four of which were withdrawn in the course of the trial) were similar to the first twenty-six, except that, as to the transactions therein set up, it was charged that the Parker-Smith Company was the agent for certain named individuals (instead of trustee of an express trust). These counts related to construction loan mortgages, given by the borrower to the company, which provided for stated partial payments of the principal of the loan to the mortgagor as the building reached specified stages of completion. Evidence was offered that the notes and mortgages in question were sold and assigned, without recourse, by the company to third parties, who paid the company the full amount of the principal, the money was deposited in a general bank account and disbursed for the general purposes of the company, leaving no funds available to make the payments to the mortgagors as they became due. It was also in evidence that from the date of organization of the Parker-Smith Company the officers thereof were, president, the defendant John E. Parker, treasurer, the defendant Clarence V. Smith, and secretary, Paul M. Smith, and that the defendants actively managed, directed, and controlled the affairs of the company, comprising the entire board of directors and all of the officers.

Benjamin Slade, Charles J. Martin, and Louis Weinstein, all of New Haven, for appellants.

Samuel E. Hoyt, State's Atty., Arthur F. Brown, and Abraham S. Ullman, all of New Haven, for the State.

Argued before WHEELER, C.J., and MALTBIE, HAINES, HINMAN, and BANKS, JJ.

HINMAN, J. (after stating the facts as above).

The assignments of error are numerous, but most of them depend upon and are determined by a few general propositions. The first of these is the applicability, to the charges, of the statutes upon which the prosecution is based. The first twenty-six counts of the information were founded upon and brought under section 6515 of the General Statutes, which reads as follows: " Every officer or agent of any public, municipal or private corporation, every executor, administrator, guardian, conservator and every trustee under a testamentary or express trust, who shall wrongfully appropriate and convert to his own use the money, funds or property of such corporation, estate, ward, trust or other person, shall be fined not more than ten thousand dollars or imprisoned not more than ten years or both."

The portion of this statute involved in the present case is that which applies to a " trustee under a testamentary or express trust, who shall wrongfully appropriate to his own use the money, funds or property of such *** trust." In the present instance it is alleged in the information, the proof is to the effect, and the defendants concede, that the trustee of each of the trusts involved in the several counts was the corporation, the Parker-Smith Company, and not, as distinguished therefrom, the defendants individually, or any of them. The acts charged against the defendants as constituting embezzlement on their part were alleged to have been done by them acting as officers of the corporation, for and on its behalf. It was undisputed that the moneys claimed to have been converted were not actually appropriated to the use of the defendants, or any of them, as individuals, but were deposited in or transferred to the general bank accounts of the corporation and disbursed therefrom for its general purposes.

The contention of the state on the trial, and here, and the decision of the trial court on this point, as reflected in rulings and enunciated in the charge, were that, notwithstanding the foregoing, " if the officers and directors of a corporation participate in a criminal act as a corporate act, they are individually liable for such acts," and that the fact that such an officer performed the acts in his official capacity affords no justification absolving him from criminal responsibility. The appellants maintain that, under the statute upon which these counts are based, the officers of a corporation trustee are not amenable to prosecution and punishment for acts, as such officers, for and on behalf of the corporation, although such as to constitute embezzlement by the corporation itself, or as would render them liable had they so acted as an individual trustee.

Embezzlement was not a crime at common law. It is a purely statutory offense, and is punishable, as such, only as and to the extent that the Legislature has by statute provided. " The unlawful appropriation of money and other chattels made punishable by these statutes falls short of the common-law crime of larceny because there was no felonious taking. The property being in the lawful possession of the party who appropriated it, there was no trespass or breach, of the technical possession which is essential in the case of larceny. State v. Hanley, 70 Conn. 265, 270, 39 A. 148. While the act, considered from the moral standpoint, is as bad as theft, it did not fall within the category of crimes at common law. It was a mere breach of trust. The Legislature had the power to make such acts crimes and has done so. The acts which are thus made criminal and the persons to be affected by the enactments must be determined from the terms of the statute. Statutes of other states and the construction which has been placed upon them can be of little help in construing our statute, unless such statutes are in substantially the same language as ours." State v. Lanyon, 83 Conn. 449, 451, 76 A. 1095, 1097.

We are therefore to determine the question of the applicability of this statute (section 6515) to the charges against these defendants. Being a penal statute, it must be strictly construed, in that it " cannot be enlarged by construction to cover a case not within its literal terms," or " for the purpose of more effectually suppressing the mischief at which it is directed." State v. Levy, 103 Conn. 138, 141, 130 A. 96, 97. " No act is a violation of a penal statute, unless it falls within the fair import of its language. Such statutes are not to be extended beyond the fair import of their language. They are always to be strictly construed for the benefit of the citizen. Nothing more is to be deduced from the words than they expressly warrant, and they are not to be extended by implication. In the construction of such a statute the question is, not what the Legislature actually meant to say, but what is the meaning of what it did say." State v. Penner, 85...