United States v. Smith
| Decision Date | 26 March 1907 |
| Citation | 152 F. 542 |
| Parties | UNITED STATES v. SMITH. |
| Court | U.S. District Court — Western District of Kentucky |
George Du Relle, U.S. Atty.
Wm. M Smith, for defendant.
Section 5209 of the Revised Statutes of the United States (U.S. Comp St. 1901, p. 3497) is as follows:
'Every president, director, cashier, teller, clerk, or agent of any association, who embezzles, abstracts, or willfully misapplies any of the moneys, funds, or credits of the association; or who, without authority from the directors issues or puts in circulation any of the notes of the association; or who, without such authority, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree; or who makes any false entry in any book, report, or statement of the association, with intent, in either case, to injure or defraud the association or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent appointed to examine the affairs of any such association; and every person who with like intent aids or abets any officer, clerk, or agent in any violation of this section, shall be deemed guilty of a misdemeanor, and shall be imprisoned not less than five years nor more than ten.'
The indictment in this case is based on the provisions of this section, and embraces eleven counts. The defendant has demurred to each of them. The first six counts cover that many false entries charged to have been made or caused to have been made by the defendant on the books of the Western National Bank of Louisville, while he was employed as its president, each with the intent to injure or defraud the bank or certain of its customers, and with the further intent to deceive its officers and any agent appointed to examine its affairs. A careful examination of these counts leaves no doubt upon the mind of the court that each of them is sufficient, and the demurrer to them will be overruled. United States v. Britton, 107 U.S. 662, 2 Sup.Ct. 512, 27 L.Ed. 520.
The remaining five counts, however, require us to ascertain, if possible, the proper signification of the words 'moneys, funds and credits' used in the statute, and this, in some respects, is not without difficulty. The word 'money' is doubtless equivalent to 'currency,' and its meaning is apparent. But Congress could not have intended that the word 'funds' or the word 'credits' should be construed to mean the same thing as the word 'money,' or its equivalent, 'currency,' or that the word 'funds' should be regarded as synonymous with the word 'credits.' The three words do not mean, and evidently were not expected to be construed as meaning, the same thing, as mere tautology was not designed. As used in the financial world, and, indeed, in ordinary affairs, the word 'funds' means something less flexible than 'currency.' When we speak of funding an indebtedness, we understand that it is to be put into a more permanent form. In England 'the funds' are considered to be the government's bonded indebtedness, and not its mere currency or money; and so it is also in the United States. At any rate, a careful consideration induces the court to agree with Judge Priest, in his opinion in the case of United States v. Greve (D.C.) 65 F. 489, that the word 'funds' has a different meaning from the word 'moneys' as used in the statute. In the opinion of the court the word refers to forms of somewhat permanent indebtedness and to a class of securities in which permanent investments are likely to be made.
The remaining word, 'credits,' refers to something nearer to the bank's daily business transactions, and should be given a different meaning from that of either of its associate words. We have not found in any of the dictionaries or encyclopedias to which we have access the word 'credits' in the plural form as used in the statute, nor have we found anywhere any precise definition of it as used in section 5209; but in many cases noted under the word in 2 Words and Phrases, p. 1728 et seq., we find it construed as used in the revenue laws of the states, and those cases have been instructive. Certainly, as used in section 5209, it does not mean something which is merely the opposite of the word 'debit,' commonly used in bookkeeping. But, without further enlarging upon the reasons for doing so, the court has reached the conclusion that the word 'credits,' used in the statute, means debts due the bank or promises to its to pay money, namely, such as its notes and bills receivable, as distinguished from more permanent investment securities, like government or other bonds, not payable to the bank, and not evidencing an indebtedness created by its loans to customers. Stated shortly, the court is of opinion that the word 'money' refers to the currency or circulating medium of the country; that the word 'funds' refers to government, state, county, municipal, or other bonds, and to other forms of obligations and securities in which investments may be made; and that the word 'credits' refers to notes and bills payable to the bank, and to other forms of direct promises to pay money to it. This section, in respect to the clause forbidding willful misapplications, was under consideration in the case of United States v. Britton, 107 U.S. 669, 2 Sup.Ct. 512, 27 L.Ed. 520; but the court did not there consider nor determine the meaning of the words 'funds and credits' of the bank.
If the conclusions stated approximate accuracy, we are prepared to determine the questions arising upon the demurrer to each of the remaining counts in the indictment.
The seventh count charges that the defendant willfully misapplied $2,930.60 of the 'funds and credits' of the bank with the various intents denounced by the statute. It is charged that this was done by the defendant, while acting as president of the bank, by discounting the note of one Toof for $3,000, the net proceeds of which Toof, who alone gave the note and who was at the time known by the defendant to be insolvent, divided between himself and the defendant. The word 'money' is not mentioned in this count, and there is no description either of the 'funds' or of the 'credits' so charged to have been misapplied. If the word 'money' alone had been used, it is difficult to see how there could have been any difficulty about the question; but that word was not used at all, and if the court has correctly ascertained or approximated the proper meaning and signification of the words 'funds' and 'credits,' then there should have been such a particular description of the 'funds' and of the 'credits' as would have enabled the accused to prepare his defense, and so that the judgment here would bar another prosecution. This result is manifest from the cases of United States v. Hess, 124 U.S. 483, 8 Sup.Ct. 571, 31 L.Ed. 516, Evans v. United States, 153 U.S. 586, 14 Sup.Ct. 934, 38 L.Ed. 830, and Keck v. United States, 172 U.S. 436, 19 Sup.Ct. 254, 43 L.Ed. 505, and cases cited. In Batchelor v. United States, 156 U.S., at page 429, 15 Sup.Ct., at page 447, 39 L.Ed. 478, the court said:
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