Weber v. State

• Decision Date: 11 May 1926
• Citation: 208 N.W. 923,190 Wis. 257
• Parties: WEBER v. STATE.
• Court: Wisconsin Supreme Court

190 Wis. 257

208 N.W. 923

WEBER

v.STATE.

Supreme Court of Wisconsin.

May 11, 1926.

Error to Circuit Court, Sheboygan County; Michael Kirwan, Judge.

Alvin E. Weber was convicted of embezzlement, and he brings error. Reversed and remanded, with instructions to discharge defendant.

Vinje, C. J., dissenting.

The plaintiff in error (hereinafter called the defendant) was found guilty by a jury of having embezzled the sum of $2,000, the money and property of one James Failley, by converting said sum to the use of the Sheboygan Mortgage & Security Company, contrary to the provisions of section 4418 of the Statutes.

In 1920 one Failley, who owned a farm of 80 acres, which adjoined the 160-acre farm of one Leonard, sold the same to the latter for $7,500, receiving in payment therefor the sum of $3,500 in cash, and a second mortgage on both farms in the sum of $4,000. The Sheboygan Mortgage & Security Company (hereinafter called the company) is a Wisconsin corporation, located at Sheboygan, and engaged in a general investment, brokerage, and real estate business. When Leonard had purchased the Failley farm, he executed ten promissory notes to the company, aggregating the sum of $14,500, payable in five years, with interest at the rate of 6 per cent. per annum, interest payable semiannually, and at the same time, in order to secure the payment of these notes, executed ten concurrent first mortgages upon the entire 240 acres. Thereafter Leonard executed a third mortgage in the sum of $3,700 to the Plymouth Exchange Bank. The company then sold the ten notes and the mortgages securing the same to its patrons, and thereafter acted as an agent for them in the collection of the interest.

In the summer of 1922 it was ascertained that Leonard had failed to pay interest upon all of the securities above mentioned, and had also defaulted in the payment of the taxes. In the meantime a marked decline had been experienced in the values of farm lands everywhere, and Failley, the holder of the second mortgage for $4,000 became apprehensive of his security. He sought legal advice from one Prescott, an experienced attorney of Sheboygan, with the result that it was concluded to foreclose the second mortgage. The action was begun in August, 1922, and contemporaneously with the commencement thereof, Failley paid to the company the sum of $930.75, being the accrued interest upon the ten notes and concurrent mortgages. It appears quite clearly from the evidence that both Prescott and Failley realized, when the foreclosure action was begun, that ultimately Failley would be obliged to pay these concurrent mortgages, and Failley was confident of his ability so to do. The foreclosure proceedings on the Failley mortgage of $4,000 proceeded to judgment, and, late in the fall of 1923, the property was sold at the foreclosure sale to Failley for the amount of his mortgage, with the result that he obtained title free and clear of the third mortgage of $3,700 held by the Plymouth Exchange Bank, and subject only to the ten concurrent first mortgages.

Prescott and Failley, on the 4th day of November, 1922, called at the office of the company, where they met the defendant, Weber, the secretary and treasurer of the company, and then and there paid in to the company the sum of $435, being the interest due up to that date on the ten concurrent mortgages, and the further sum of $2,000, to be applied on principal. The agreement of the parties with respect to the payments above referred to was reduced to writing in the form of a receipt, drafted by Prescott, which is of the following tenor:

“Received of A. C. Prescott, for and on account of James Failley, the sum of four hundred thirty-five dollars, interest to November 4, 1922, on a certain note given by Francis L. Leonard and Ellen Leonard, and which note was secured by a real estate mortgage on (here follows a description of the two hundred and forty acres); two thousand dollars ($2,000.00) payable on the principal of said note, the said James Failley having heretofore and on the 30th day of August, 1922, paid on account of interest on said note and mortgage the further sum of $930.75, and the said note and mortgage shall ratably secure the said James Failley for said payments. Dated November 4, 1922.

Sheboygan Mortgage & Security Co.,

A. E. Weber, Secy. & Treasurer.”

(Italics ours.)

The company kept an account with Failley on its books, and to this account the various amounts were credited. An entry in the ledger shows a credit of $2,000 on principal. Thereafter, and until the company was declared a bankrupt in April, 1925, Failley regularly paid the interest due on $12,500 to the company, and the interest so received, together with the interest on $2,000 which the company paid, was disbursed to the holders of the ten concurrent first mortgages.

Failley and Prescott testified that, before making the payments on November 4, 1922, Weber represented that one of these concurrent mortgages was in the amount of $2,000, and that, while it did not become due until 1925, the owner thereof was anxious to receive his money, and that the $2,000 would be used for the payment of such mortgage. Weber denied this statement, and took the position on the trial that the $2,000 was to be left with the company, and to be used by it, and that for such use the company would allow Failley interest on the amount at the rate of 6 per cent. per annum, which interest was to be paid out by the company in order that all of the holders of the ten concurrent mortgages would receive their interest payments.

Neither Failley nor Prescott, up to the time that the company was declared a bankrupt, made any inquiry whatsoever with respect to the disposition of the $2,000. No satisfaction of the mortgage for $2,000 was requested or delivered, nor was there an assignment thereof made or demanded. The $2,000 mortgage, together with all the other concurrent mortgages, remained in the possession of the various owners thereof. Except as above stated, neither Weber nor the company had any control over, or interest in, these concurrent mortgages. Everything went along serenely with the parties until after the company had been declared a bankrupt, and then for the first time Prescott and Failley became apprehensive, with the result that the criminal action herein was begun and prosecuted to final judgment.

Further facts will be stated in the opinion.Arthur H. Bartelt, of Milwaukee, for plaintiff in error.

Herman L. Ekern, Atty. Gen., and Charles Voigt, Dist. Atty., of Sheboygan, for the State.

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

The defendant is charged in the information with embezzlement of $2,000 on November 4, 1922, being the amount paid to the company on that date, upon the theory that this sum was paid to the company, and that Weber, as secretary and treasurer of the company, received it, deposited it to the credit of the company on its open checking account in a Sheboygan bank, and that thereafter he caused it to be checked out for the benefit of the company...