United States v. King

• Decision Date: 01 October 1973
• Docket Number: No. 73-1119.,73-1119.
• Citation: 484 F.2d 924
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. E. Ross KING, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

484 F.2d 924 (1973)

UNITED STATES of America, Plaintiff-Appellee, v. E. Ross KING, Defendant-Appellant.

No. 73-1119.

United States Court of Appeals, Tenth Circuit.

Argued and Submitted August 13, 1973.

Decided October 1, 1973.

Rehearing Denied October 26, 1973.

Paul D. Cooper, Asst. U. S. Atty. (James L. Treece, U. S. Atty., on the brief), for plaintiff-appellee.

Jack B. Speight, Cheyenne, Wyo. (Hanes, Carmichael, Johnson, Gage & Speight, Cheyenne, Wyo., on the brief), for defendant-appellant.

Before LEWIS, Chief Judge, and BARNES^* and McWILLIAMS, Circuit Judges.

McWILLIAMS, Circuit Judge.

E. Ross King, hereinafter referred to as the defendant, was adjudged guilty by a jury on both counts of a two-count indictment based on 18 U.S.C. §§ 2 and 656. The first count charged him with the misapplication of bank funds as a bank director. The second count, based on a separate transaction, charged him with aiding and abetting another who was a bank director in the misapplication of bank funds. The defendant now appeals and the nature of the issues suggests that we examine more closely the charges in the indictment.

In count 1, the defendant and his brother, Paul W. King, were jointly charged with unlawfully misapplying funds of the Kiowa State Bank in violation of 18 U.S.C. §§ 2 and 656. More specifically, in count 1 it was alleged that as of March 2, 1970, the defendant and Paul King were directors of the Kiowa State Bank, a federally insured bank, and that on that date they unlawfully misapplied monies of the bank by causing a money order to be disbursed in the amount of $50,000 made payable to Applecross Farms and Maddison Farms, which sum was ultimately converted to their personal use.

In count 2, it was alleged that on or about June 14, 1971, Paul King was a director of the Kiowa State Bank and that on or about that date Paul King unlawfully misapplied monies belonging to the bank by causing to be disbursed to one A. Paul Williams the sum of $25,000, $19,516 of which was ultimately converted to the personal use of Paul King and the defendant. The only charge, as such, in count 2 involving the defendant is that he aided and abetted his brother, Paul King, a bank director, in the disbursement of bank funds to the aforesaid A. Paul Williams.

As indicated, the defendant and his brother, Paul King, were jointly indicted. However, before trial Paul King pleaded guilty to count 1 of the indictment, and other charges then pending against him were dismissed. The defendant proceeded to trial on both counts in the indictment, and he was convicted by a jury on both counts. The grounds for reversal are grouped as follows: (1) The evidence is legally insufficient to sustain a conviction on count 2; (2) plain error was committed by the trial court in permitting the defendant's former attorney to testify against him as a Government witness; and (3) the defendant was denied his Sixth Amendment right to the assistance of counsel because of trial counsel's gross incompetence. As concerns the last mentioned matter, needless to say, present counsel for the defendant was not trial counsel.

Although the sufficiency of the evidence argument runs in the main to count 2, we shall first briefly review the Government's evidence as it relates to count 1, in order that the entire matter may be viewed in context. As of March 2, 1970, Paul King was a director of the Kiowa State Bank, located in Kiowa, Colorado, and served as its president. The defendant as of that same date was a director of the bank, but not an officer. Without going into unnecessary detail, on March 2, 1970, the defendant, and his brother, caused a loan in the amount of $50,000 to be made by the bank to Applecross Farms, Inc., on the latter's promissory note. The president of Applecross Farms, Inc., endorsed the check in question in favor of a company controlled by the defendant and the defendant thereafter then drew two checks on his company's account, one check being in favor of his brother, Paul King, in the sum of approximately $25,000, and a second check in the same amount being made payable to himself. Paul King and the defendant then deposited the proceeds of these two checks in their respective personal accounts in the Kiowa State Bank.

As concerns the charge contained in the second count of the indictment, it would appear that as of the date of the transaction upon which the second count is predicated, namely, June 14, 1971, the defendant had resigned as a bank director and was no longer serving in such capacity. However, his brother, Paul King, was still serving as a bank director and president. The fact that the defendant was no longer serving as a director of the bank is apparently the reason that insofar as the second count is concerned the defendant was only charged with aiding and abetting the director, namely, his brother, Paul King, in the misapplication of bank funds.

In any event, as concerns count 2, the Government's evidence showed that the defendant and his brother formed an entity known as the Kiowa Real Estate Investment Trust and hired A. Paul Williams as a salesman. The three of them, i. e., Williams, the defendant, and his brother, arranged for a loan to Williams from the bank in the sum of $25,000, with Williams giving the bank his promissory note in exchange therefor. In this regard, Williams testified that though he signed the note, he understood that he would not be called on to pay the same, and that payment would ultimately be made by the defendant or his brother. Of the sum loaned, $5,000 was used to pay off a preexisting overdue note of Williams to the bank, and Williams endorsed the balance of the loan, approximately $20,000, over to the defendant. This sum was then traced to the defendant's personal account in a Denver bank.

Williams' testimony was to the effect that at the time of this transaction, the Kiowa Real Estate Investment Trust was experiencing financial troubles, and that the proceeds of this loan were given the defendant to recoup him for advances previously made by him to the trust. While the evidence on this point was not fully developed, the record is such as to permit the inference that the real purpose of this particular loan was to improve the overall financial standing of the Kiowa Real Estate Investment Trust, which, as indicated, was jointly owned by the defendant and his brother.

Although, as will be brought out later, there is some challenge to the sufficiency of the evidence to sustain a conviction under the first count of the indictment, defendant's insufficiency of the evidence argument centers mainly on the second count. In this regard, counsel points out that as of June 14, 1971, the date of the transaction upon which the second count is predicated, the defendant was no longer director of the bank and that accordingly the only way he could violate 18 U.S.C. §§ 2 and 656 would be by aiding and abetting another, namely, his brother, who was a director, in the wilful misapplication of bank funds. Counsel then goes on to argue that before the defendant can be found guilty as an aider and abettor, the Government must show that there was a principal who was a bank director and who, acting as such, misapplied bank monies. In this connection, then, it is asserted that there is insufficient evidence to show that defendant's brother, Paul King, violated the provisions of 18 U.S.C. § 656 and that such being the case the defendant cannot be guilty of aiding and abetting his brother in any violation. We disagree with this analysis of the record.

The phrase "wilfully misapplies" as used in 18 U.S.C. § 656 has been the subject of considerable judicial discussion. It has been held that the words "wilfully misapplies" have no settled technical meaning, such as "embezzle," for example, and that "misapply" was intended to include acts...