U.S. v. Hand

• Decision Date: 28 July 1975
• Docket Number: No. 73-1949,73-1949
• Citation: 516 F.2d 472
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Kathryn Frances HAND, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 472

516 F.2d 472

UNITED STATES of America, Plaintiff-Appellee, v. Kathryn Frances HAND, Defendant-Appellant.

No. 73-1949.

United States Court of Appeals, Fifth Circuit.

July 28, 1975.

Morton L. Susman, Mark W. Perrin, Thomas M. Roberson, Houston, Tex., for defendant-appellant.

Anthony J. P. Farris, U. S. Atty., Robert Darden, Asst. U. S. Atty., Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before BROWN, Chief Judge, and WISDOM, GEWIN, BELL, THORNBERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER, SIMPSON, MORGAN, CLARK, RONEY and GEE, Circuit Judges.

GEE, Circuit Judge: ^*

Kathryn Frances Hand was convicted by a jury of ten counts of embezzlement from her employer, a federally insured credit union. Her appeal presents, with others, contentions of unreasonable search and seizure, of deficiencies in the indictment and variances in proof, and of an inadequate defense by retained trial counsel.

Mrs. Hand was the bookkeeper and office manager of ILA 1351 Federal Credit Union (the Union), operating in Houston, Texas. About 21/2 years before the events which led to her indictment, she testified, she discovered a serious shortage of cash in the Union accounts, a shortage which steadily increased over the ensuing time to many thousands of dollars. In effective control of the Union's accounting operations, she admitted having concealed the growing shortage from federal examiners over the course of several annual audits, but maintained that she had no idea where the funds were going. The technique she used to hide the shortage is known in accountancy as "lapping": using later cash receipts to match earlier deposits and relying on posting delay to bridge the gap between what should have been in the coffers and what was. We affirm her conviction.

I. The Search and Seizure Contention

Appellant Hand had concealed in several purses many cash-received vouchers evidencing her scheme for concealing the credit union's shortage. These purses were located in or on file cabinets and desks in the Union's office. At the exact moment, or very shortly after, she had given Hale, the federal examiner, probable cause to think her the thief, she advised him that she was sending by for these purses. On receiving this word, he opened the purses to ascertain whether or not they were hers, he testified ¹ and discovered the incriminating vouchers.

Assuming that Hale was the sort of person to whose searches and seizures the Fourth Amendment applies, his search of the handbags in these circumstances, however natural and reasonable, raises close questions. Before us, the United States seeks to justify it under the "plain view" exception to warrant requirements, contending that Hale blundered upon the evidence in the course of an innocent attempt to find identification. This was, indeed, his testimony, and the trial court considered and rejected a motion to suppress after hearing it. It thus might seem the court credited Hale's explanation, an in limine fact-finding which we would be reluctant to overturn on a cold record. ² On the other hand, the basis of the court's ruling is not clear: the record indicates the government urged that Hale was merely a private citizen, to whose searches Fourth Amendment safeguards did not apply, while the defense memorandum on the subject sought to negative consent as a warrant exception. The court merely overruled the defense motion to suppress, without elaboration. In these circumstances, where we are unable to determine with assurance whether the court made the fact-finding innocent stumbling upon the evidence upon which the plain view exception must rest, we must proceed further. ³ To do so requires consideration of the facts leading up to the search.

When Hale arrived in early April, 1971, to make his annual examination of the Union, he was aware from three previous examinations of its continuing problem with the handling of cash. He considered Mrs. Hand to be the one who "ran" the Union. Early on, he discovered a thirty-dollar cash shortage related to a particular cash voucher. In the course of the audit, other ominous signs appeared. Interest income appeared too small for the volume of loans. About $22,000 in unreported delinquent loans surfaced. Upon inquiry of Mrs. Hand, she produced after a day's delay extension agreements covering the delinquent loans, but four of these bore signatures which Hale felt, and advised Mrs. Hand, appeared suspicious. A check with one of the supposed signatories produced a receipt showing his loan had not been extended at all, but paid. At this point, Hale advised the Union's board of the situation, suggesting suspension of Mrs. Hand and a thorough investigation and verification of all accounts. On April 8, she was suspended.

The next day, April 9, Hale was informed by the other female employee of the Union, Mrs. Westergreen, that Mrs. Hand had telephoned about some missing ledger cards. Hale called Mrs. Hand, and she told him the names of various members whose ledger cards had, she said, mysteriously appeared that morning on her front porch. Hale and the credit union president went to her home that same day and received from her ledger cards corresponding to the names she had given over the telephone, most of which were torn across and which Hale recalled taping back together. Upon Hale's return to the Union office, Mrs. Hand called again and confessed that a shortage of funds had been going on at the Union for two-and-a-half years, that during this period she had been concealing the shortage, and that though she did not know where the funds had gone she was willing to make some amount of restitution. ⁴

At about the same time, Mrs. Hand also told Hale, either in this call or in a third call to him that day, that she was sending for some of her purses which were in the Union office, as well as some books and scarves. In the process of gathering up her property, Hale testified, he opened the purses, looking for credit cards or for other identification of them as Mrs. Hand's. This he found. He also found over 150 vouchers minuting cash transactions in tens of thousands of dollars, most of which were initialed by Mrs. Hand as the receiving teller. Assuming the worst, that a deliberate, warrantless search of the purses was carried out at this point by Hale, does it pass Fourth Amendment muster?

We conclude that it does. By the time Hale learned of Mrs. Hand's immediate purpose to remove her handbags from the office, she had admitted juggling the Union's accounts; and numerous of its financial records had appeared at her home, under highly suspicious circumstances and in a condition indicating an aborted effort to destroy them. Probable cause existed to believe that she had previously concealed and removed and might again conceal or remove records, and the purses were a likely vehicle for either action. Hale would have been remiss in his duty had he permitted such containers and their contents to be taken away from the accounting files without determining that they were not being so used.

It may be that in these circumstances, even absent Mrs. Hand's notice that she was sending for the purses, Hale would have been authorized by the Union's consent to examine the contents of whatever containers he found in and about the files. The record indicates that purses were either in or on the file cabinets or desks in the office, and it does not indicate that Mrs. Hand had use of these furnishings to the exclusion of other employees, rather the contrary. ⁵ And though personal handbags imply privacy, the fact that numbers of them were left about the office while she was elsewhere places these in a position little more personal, if at all, than that which would have been held by a closed folder found in the files and marked, say, "K. F. Hand-Personal." At any rate, he received Mrs. Hand's call stating her purpose to remove the purses while present in a place where he was authorized to be and to most of which he had an unquestioned right of access.

But when to these is added the exigency of Mrs. Hand's stated purpose to send for the purses, the scale is decisively tipped. Hale's choices at this juncture were to release the purses unexamined, to refuse to release them while he contacted regular law enforcement authorities and a warrant issued, or to inspect their contents and be guided by what he found. Probable cause existing, the first course would have been a dereliction of duty. As to the latter two, if Hale's official "investigative" position was such as to subject him to Fourth Amendment strictures, it was perforce such as to authorize his seizure and immobilizing of the purses. Having the power to seize, in the situation presented, he had the duty to do so. And having seized, the lesser intrusion was to check the purses for Union documents and, if none were found, to release them without more ado. Chambers v. Maroney, 399 U.S. 42, 51-52, 90 S.Ct. 1975, 1981-1982, 26 L.Ed.2d 419, 428 (1970); United States v. Soriano, 497 F.2d 147 (5th Cir., en banc, 1974).

It is true that the facts of Chambers and Soriano differ from these and from each other, and true moreover that Mrs. Hand was not under arrest ⁶ and her handbags did not contain, and were not thought to contain, contraband or dangerous instrumentalities. But they were easily movable, and she had announced a positive and immediate intent to remove them. There was probable cause to believe that they contained evidence, and the opportunity to preserve it was fleeting. The probable cause, moreover, had arisen suddenly and as a result of unforeseeable circumstances Mrs. Hand's abrupt confession to cooking the books. Thus the exact requirements for application of Chambers set out by Mr. Justice White were complied with ". . . the circumstances that furnish probable cause to search a particular auto for particular articles are most often...