State v. Stewart
| Decision Date | 11 June 1930 |
| Docket Number | 30175 |
| Citation | 29 S.W.2d 120 |
| Parties | STATE v. STEWART |
| Court | Missouri Supreme Court |
Du Val Smith and Randolph & Randolph, all of St. Joseph, for appellant.
Stratton Shartel, Atty. Gen. (G. C. Weatherby, of Kansas City, of counsel), for the State.
Defendant and his son, J. H. Stewart, were jointly charged by indictment in the circuit court of Buchanan county with having, as president and secretary-treasurer, respectively of the Fidelity Trust Company of St. Joseph, Mo., received and assented to the reception of a deposit of $ 45 in said institution, they knowing it to be in failing circumstances at the time. The indictment was returned March 31, 1927. Thereafter a severance was granted, and this defendant was tried March 12-16, 1929, the jury finding him guilty as charged and assessing his punishment at two years' imprisonment in the penitentiary. From the judgment which followed he appeals.
The state's evidence tended to prove the following: The Fidelity Trust Company was organized for business in 1920, with a capital of $ 100,000. Defendant was its largest stockholder, owning about $ 50,000 of the stock. It continued in business until December 28, 1926, on which day at about 2 or 2:30 p. m., its doors were closed by order of defendant because of depletion of its cash by a 'run' started upon it following the closing of the Bartlett Trust Company, situated in the same block, which occurred in the forenoon of that day. The deposit in question was made by one B. M. Ringel on the same day, a few hours before the Fidelity Trust Company closed its doors. It was received by a teller, Helen Doring, who worked under the control and direction of defendant; he being president and general manager in active management of the trust company. It never reopened.
The state finance department at once took charge, and about February 1, 1927, appointed Robert B. Orr to liquidate the institution. Liquidation was still in process at the time of trial. A dividend of 40 per cent. had then been paid to general creditors. There was no intimation in the evidence of embezzlement or defalcation by defendant or any officer of the trust company or of any falsification of the records.
In a published statement of November 22, 1926, made pursuant to a call from the commissioner of finance, the cash account shown was $ 10,000 in excess of the correct amount as shown by the books, and there was a corresponding 'raise' in the total of deposits shown, in order to balance. Defendant, being asked about this at an examination of the trust company made December 9 and 10, 1926, expressed regret and promised that nothing of the kind would occur again.
The trust company had been thoroughly examined by three state bank examiners on December 9 and 10, 1926. Following that examination, it seems that certain requirements, to be complied with in fifteen, thirty, sixty, and ninety days, were made by the commissioner of finance, but what these requirements were is not shown, nor whether any of them had been met when the trust company closed its doors. It was shown, however, on cross-examination by the state of defendant's witness Mr. Quigley, that at or immediately after the December 9 examination defendant had borrowed $ 5,000 from Quigley, telling Quigley that he wanted it for use in the trust company and that Mr. Shelby, the examiner in charge of that examination, had said that that sum would put things in good shape, or words to that effect. Shelby, who was a witness, was not asked about and did not deny making such statement to defendant. Out of the $ 5,000 borrowed from Quigley, defendant paid two months' rent on the building occupied by the trust company and applied substantially all of the balance upon his indebtedness to the institution.
At the time the trust company closed, its total resources and liabilities, according to its books, were each $ 517,539.44. The loans and discounts amounted to $ 414,810.62; furniture and fixtures were carried at $ 22,694.31; and real estate at $ 11,604.02. Its cash had been reduced by the unusual withdrawals of that day to $ 4,621, and if a $ 3,500 check, the presentation of which precipitated the closing, had been paid on presentation, the cash would have been practically exhausted. It had deposits aggregating approximately $ 346,000 and owed bills payable amounting to $ 30,500. On November 22, 1922, when its last previous published statement had been made, its records showed resources and liabilities each approximately $ 586,000 and total deposits of about $ 405,000. Its cash reserve on November 22 should have been approximately $ 40,600, and was in fact nearly $ 9,000 less. From that date until it closed the cash reserve continued about that amount below what it should have been.
The trust company had sold for $ 4,500 part of the furniture and fixtures it originally owned, but continued to carry that item on its books at the same value as before the sale. The actual value of furniture and fixtures was not shown, nor was the actual value of the real estate.
To show the alleged failing circumstances of the trust company, the state relied upon the testimony of Mr. Orr, the deputy commissioner in charge of the liquidation, as to certain notes about which he was interrogated. Mr. Orr's testimony tended to show that after diligent inquiry and efforts to collect these notes, he had been unable to find any property of the makers out of which collection could be made. The notes so shown to be uncollectible and which were offered in evidence aggregated about $ 75,000. There was testimony concerning other notes claimed by the state to be uncollectible, but which were not admitted in evidence; the court evidently either deeming the evidence as to their insolvency insufficient, or that Mr. Orr was not qualified to testify as to them. As to several of the larger notes admitted in evidence it is doubtful, on the showing made by the state, whether defendant should be charged with knowledge that they were not good. For example, one George Robinson owed the trust company nearly $ 10,000. He had moved to California some years previously, but had retained property and had money loaned in Buchanan county. When he became indebted to the trust company and when he left for California, he was generally reputed to be thoroughly solvent, indeed was considered a rich man 'for that community.' He died in Los Angeles shortly after the trust company closed, and it was then learned that he had conveyed most of his property to his children, but there is no showing that notice of such conveyances or of Robinson's changed financial status had been brought to the attention of or was known to defendant or other officers or directors of the trust company, nor were facts shown from which it is apparent that they should have known thereof. The evidence tending to show that Robinson had become insolvent would not therefore tend to show knowledge on defendant's part of a failing condition of the trust company. State v. Beaghler (Mo. Sup.) 18 S.W.2d 423, 427.
Another of the larger creditors had similarly retired from business and moved to California, being reputed at that time to be worth over $ 100,000, and having on file with the trust company a financial statement so showing. Credit was extended and continued to him upon the faith of that statement and of his established reputation for solvency and integrity. His note was treated by Mr. Orr as uncollectible, but again it is not shown that the debtor's changed financial status was known to defendant or other officers of the trust company.
In another instance a note secured by first deed of trust on real estate of sufficient value was assigned to the trust company as collateral for a loan, the collateral appearing on its face fair and genuine. After the trust company went into liquidation, it was learned that the grantor named in the deed of trust challenged its genuineness and the matter was in litigation at the time of the trial. But there was no evidence indicating that defendant had had any reason to doubt the genuineness of the security.
Other instances might be mentioned in which notes which the state's evidence tended to show proved uncollectible in whole or in part might reasonably have been considered good by defendant and some of which in fact might have been collected had the institution continued a going concern.
Defendant earnestly insist that there was a complete failure of proof that the trust company was in failing circumstances. While the showing made by the state upon that issue appears to us by no means conclusive of insolvency, we are not prepared to hold that a submissible case was not made. The state may be able to present a stronger showing in the event of another trial, and in view of our conclusion that the case must be reversed and remanded for other reasons, we deem it unnecessary to discuss further the evidence on this issue.
Appellant assails state's instructions No. 5 and No. 6, which were the instructions hypothesizing the facts to be found to authorize conviction, and in that connection the refusal of the court to give certain converse instructions requested by him. Said instructions No. 5 and No. 6 read as follows:
No. 5. 'The court instructs the jury that if you find and believe from the evidence, that on or about the 28th day of December, 1926, at the County of Buchanan and...
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