« AnteriorContinuar »
the statute does not mean that it must be made to appear that the party accused had malice or ill will toward the association. These terms, as used in the statute, mean nothing more than that the general intent to injure or defraud always arises, in contemplation of law, when one willfully or intentionally does that which is illegal or fraudulent, and which, in its necessary and natural consequences, must injure another; so that, while these offenses of issuing and putting forth a certificate of deposit, and of drawing bills of exchange, without authority of the directors, and of willful misapplication of moneys, funds and credits of the bank, must be committed by the accused with intent to injure or defraud the association, that intent may be shown, or may be conclusively presumed, from the doing of wrongful, fraudulent, and illegal acts, which, in the necessary results, naturally produce loss or injury to the association. The law presumes that every man intends the legitimate consequences of his
Wrongful acts, knowingly or intentionally committed, can neither be justified nor be excused on the ground of innocent intent. The color of the act done, with knowledge of its natural and necessary results, determines the complexion of the intent. If, therefore, the moneys, funds, or credits of the Galion National Bank are shown to have been willfully misapplied, as charged in the several counts of the indictment, by the defendant Hays, as president of the bank, and if it be further shown that the defendant Flickinger aided and abetted therein, and that the said moneys, funds, and credits were converted from the use of the bank to the use of the parties named in the several counts of the indictment, whereby, as a necessary, natural, or legitimate consequence, the association's capital is reduced, or placed beyond the control of its directors, or its ability to meet its engagements or obligations or continue its business is lessened or destroyed, the intent to injure or defraud the bank must be conclusively presumed. Acts involving such consequences, when knowingly and wrongfully committed, establish the guilty intent to injure or defraud mentioned in the statute, and disclose moral turpitude utterly inconsistent with an innocent intent. And the same rule of construction should be by you applied in the consideration of the counts charging the unlawful issuing, without the authority of the directors, of the certificate of deposit and of the drafts mentioned in the indictment.
Further, in this connection, I instruct you, with reference to the terms "with intent to injure or defraud," that ordinarily the intent with which a man does a criminal act is not proclaimed by him. Ordinarily there is no direct evidence by which a jury may be satisfied, from the declarations of one charged with crime, as to what he intended when he did a certain act. The statute does not mean that it must be made to appear to the jury, by proof which convinces their minds beyond a reasonable doubt, that the defendants had malice or ill will toward the bank, or that they intended to wreck it. The intent to injure or defraud, contemplated by the statute, is not inconsistent with a deep and abiding interest on the part of the accused in the prosperity of the bank and a sincere desire for its ultimate success and welfare.
The counts charging misapplication of funds describe such misapplication, in certain forms, as follows: In counts 4, 5, 6, 7, 8, 9, 10, and 11, by discounting certain notes of the Flickinger Wheel Company for the use and benefit of, and crediting the proceeds to, the wheel company; the wheel company and the indorsers of the several notes being then and there wholly insolvent, as Hays and Flickinger then and there well knew. In counts 12, 13, 14, 15, 16, 17, and 18, by discounting certain notes of the Decatur Buggy Company for the benefit of, and crediting the proceeds to, the Flickinger Wheel Company; the wheel company and the buggy company being then and there wholly insolvent, as Hays and Flickinger well knew. In counts 46, 47, and 48, by discounting sundry notes of different concerns for the benefit of, and crediting the proceeds to, the Flickinger Wheel Company; the wheel company and the makers of the notes being then and there wholly insolvent, as Hays and Flickinger then and there well knew. In count 49, by discounting for the benefit of, and crediting the proceeds to, the Galion Wagon & Gear Company, a draft of the Galion Wagon & Gear Company; the maker and acceptor being then and there wholly insolvent, as Hays and Flickinger then and there well knew. In counts 50, 51, and 52, by discounting certain notes of the Galion Wagon & Gear Company to the Flickinger Wheel Company for the benefit of, and crediting the proceeds to, the Flickinger Wheel Company; both of said companies being at the time wholly insolvent, as Hays and Flickinger then and there well knew. ID counts 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, and 31 by paying out of the funds of the bank to the Decatur Buggy Company on the order of the Flickinger Wheel Company, the amounts of the several checks described in these counts; the Flickinger Wheel Company not having, at the time the checks were paid, any funds on deposit in the bank to its credit, and the Flickinger Wheel Company being then and there insolvent and entitled to no credit from said banking association, as Hays and Flickinger both then and there well knew. In counts 37, 38, 39, 40, 41, 42, 43, 44, and 45, by discounting and passing to the credit of the Flickinger Wheel Company the proceeds of certain drafts therein described, aggregating some $57,000, which drafts the indictment charges were worthless, unsecured, false, fictitious, fraudulent, and unauthorized, and that the Flickinger Wheel Company was insolvent, which facts, it is charged, were known to the defendants.
It will thus be seen that, under the general classification of the charge of misapplication of funds of the bank, several different forms of offenses are described. As respects all of these charges of misapplication, the same general rules of law are to be applied, with some additional rules respecting those misapplications included in the counts charging such misapplication by the discounting of drafts on the Vehicle Wheel Club. We will therefore first consider the rules applicable to the charges of discounting paper of the Flickinger Wheel Company, the Decatur Buggy Company, the Galion Wagon & Gear Company, the several notes described in counts 46, 47, and 48, and the checks of the Flickinger Wheel Company to the order of the Decatur Buggy Company, drawn on the account of the Flickinger Wheel Company, and paid when the Flickinger Wheel Company had no funds to its credit, and when it is charged it was entitled to no credit and was insolvent. In order that the defendant Hays may be found guilty on any one of these counts of thus applying the funds of the bank, it must appear, by proof which satisfies you beyond a reasonable doubt, that at the time of the commission of his several acts the several concerns liable on the particular paper on account of which credit was given were insolvent, that Hays knew they were insolvent, and that he gave the credit, and thus misapplied the funds of the bank, for the purpose of injuring or defrauding the bank.
It is not a misapplication of the funds of a bank, as that term is used in the law, merely that one should give credit to an insolvent person or corporation; nor is it a misapplication of the funds of a bank for one merely to honor a check of a depositor at a time when there are no funds to the credit of the depositor. In either case, the element of an intent to injure or defraud the bank must exist; and that element does not exist if the person who does the act complained of does it in good faith, with the expectation that, in the one case the note which was discounted will be paid, or, in the other case, that the overdraft of the depositor's account will be made good. It is wholly a question of intent, and of good faith. It is impossible to look into the mind of a man, to discover what intent therein lies, or what its actual state is. We can judge only by circumstances, aided by certain rules of law which experience has shown to be just and useful; and it is my duty to say to you, in this connection, that what the intent of the defendants was in respect to these severa) acts, and whether or not they in good faith believed these concerns and individuals to be solvent, are questions for you to determine, as best you may, from a consideration of the 'facts and surrounding circumstances.
On this question of intent and good faith, many facts produced in evidence must be considered: What did Hays know about the business of the concerns involved in this indictment? What activity did he display in their business? What information came to him, growing out of their transactions with his bank? What significance is to be given to such letters or statements as he may be shown to have written or made? What influence on his conduct had his interest in the bank, as a large stockholder, on the one hand? How great was his interest in these concerns, on the other? These are circumstances which you should consider in interpreting all the evidence in the case, and especially in respect to the subject of his knowledge and of his good faith. So, upon these counts to which I have just referred, you will consider the knowledge which the defendant Hays had, and the knowledge which the defendant Flickinger had, and if you find that honestly and in good faith they believed these concerns to be solvent, and in discounting these notes and paying these checks had no intent to injure or defraud the bank, then you should return a verdict of not guilty with respect to the counts to which I have referred.
I am asked by the defendants to charge, and I do charge, what is perhaps a mere amplification of what I have already said: The burden of proving that the defendants are guilty, under the counts of this indictment charging them with allowing an overdraft or overdrafts to the Flickinger Wheel Company, beyond a reasonable doubt, is upon the government, and it is incumbent upon the government, in order to prove the charges of allowing an overdraft or overdrafts, to prove beyond a reasonable doubt that the defendant Hays, as the president of the Galion National Bank, in so doing did not act in good faith, and that at the time of allowing such overdraft or overdrafts he did not believe, and had no reasonable grounds to believe, that the money could be repaid, and that he intended by the transaction to injure or defraud the bank, and that the defendant Flickinger aided and abetted him in so doing; and in connection with these charges you should look to all the evidence as to the condition of the account of the Flickinger Wheel Company with the Galion National Bank before and subsequent to the time of allowing these overdrafts in determining the good faith of the defendant Hays. And the general principle that runs through that charge, thus requested, is applicable upon all classes of offenses charged in this indictment.
We come now to consider the remaining counts under the general charge of misapplication of the funds of the bank, namely, those counts which refer to the drafts made by the Flickinger Wheel Company on the Vehicle Wheel Club, and accepted by the Vehicle Wheel Club, by E. Flickinger, president. The charge, in all of the counts referring to these drafts, is not only that the Flickinger Wheel Company, the drawer, was insolvent, but that the drafts themselves were fictitious, unauthorized, and fraudulent. The claim made by the government is that these drafts were drawn by the Flickinger Wheel Company, through the direct act of the defendant Flickinger, with the knowledge, approval, and contrivance of the defendant Hays, when there was no indebtedness whatever, present or expected, on the part of the Vehicle Wheel Club to the Flickinger Wheel Company; that the drafts were accepted by E. Flickinger, as president of the Vehicle Wheel Club, without any authority whatever from the club, and without any basis of obligation on the part of the club; that this was done in order to injure or defraud the bank—that is, that these large sums of money were passed to the credit of the Flickinger Wheel Company, apparently on the faith of the acceptance by the Vehicle Wheel Club of the Flickinger Wheel Company's drafts.
The defendants claim that some conversation had occurred between Flickinger and some of the members of the wheel club, whereby some understanding had been arrived at that some of the stock which the Flickinger Wheel Company had on hand would be purchased hy these members of the Vehicle Wheel Club. A large number of the members of the Vehicle Wheel Club-if not all of them-have testified that the wheel club had no arrangement whatever with Flickinger for the purchase of any of the stock of the wheel company, and had entered into no contract and incurred no obligation to take it. Nor do I understand that either of the defendants claim that any such contract was made or obligation created, but that the basis of these drafts was some existing or expected indebtedness on the part of some individual member or members of the club, growing out of his purchase or agreement to purchase some of the stock of the wheel company for his own use and benefit. If this be true, then I say to you that these drafts, thus accepted and discounted for the benefit of the Flickinger Wheel Company, were, in so far as they purported to be the paper of the Vehicle Wheel Club, or paper on which that club could in any respect be held liable, fictitious, and known to be such by the defendants; and if the defendant Hays procured this fictitious paper to be thus made, and discounted it in the Galion National Bank for the benefit of the Flickinger Wheel Company, with the purpose of defrauding the bank, then I say to you
that he would be guilty of the crime charged in the counts in which this paper is described. This would be true if the defendant Hays had no reason to believe that the Vehicle Wheel Club was itself responsible for the amount of these drafts and had authorized the acceptance of them.
Whether or not the discounting of this paper was done for the purpose of defrauding the bank depends upon the evidence in the case, and your determination of its effect in the light of the rules of law which I have already given and will now proceed to give you. If this paper was thus procured to be made in such form as to make it appear that the Vehicle Wheel Club was primarily responsible for its payment, in order to deceive the directors of the bank, or any other person who had the right to examine its securities, and if it was procured to be so made because the defendant Hays knew, or had reason to know, that, if the facts were known by persons having authority in respect to it, such paper would not be discounted for the benefit of the Flickinger Wheel Company, and injury to the bank resulted thereform, then such act would be a fraud upon the bank of such character as would make the defendant Hays guilty of the crime of misapplying the funds of the bank. And if Hays was so guilty, and the defendant Flickinger aided and abetted him in the accomplishment of this act or purpose, he (Flickinger) would be guilty, as charged in these counts of the indictment, as such aider and abettor.
Whether or not such a purpose to defraud the bank existed is to be gathered by you from all the testimony. Do the circumstances surrounding the making of these drafts indicate an honest, or a dishonest, purpose on the part of these defendants? Was this transaction carried on in the way in which it was carried on, so as to deceive the directors into the belief, if they examined the drafts, that the Vehicle Wheel Club was responsible upon them, when, in fact,
Is any significance in that connection to be attached to the fact that the defendant Hays caused a rubber stamp to be made, and the impression of it printed on the face of the drafts: "Accepted. Vehicle Wheel Club,
Pres."? What was the purpose of this whole transaction, viewed in the light of the surrounding circumstances? It is for you to say. If it was for the purpose of defrauding the bank, then the defendants are guilty under these counts of the indictment. Irrespective of the circumstances to which I have just referred, relating to the alleged fictitious and fraudulent character of these drafts, the other propositions of law which I have laid down in respect to this general branch of the case apply; that is to say, the defendant Hays would be guilty of a misapplication of the funds of the bank, growing out of the crediting of the proceeds of these drafts on the Vehicle Wheel Club to the Flickinger Wheel Company, if, at the time the proceeds were so credited, the Flickinger Wheel Company was insolvent, and Hays knew it, and did the act of thus crediting the paper of an insolvent person with intent to defraud the bank.
I come now to the second general branch of the case, namely, to those counts of the indictinent wherein it is charged that the defendant Hays, with the defendant Flickinger aiding and abetting him, issued, without authority of the board of directors, with intent to defraud the bank, first, certain drafts described in counts 32, 33, 34, 35, and 36; and, second, a certain certificate of deposit referred to in counts 1, 2, and 3. It is not the contention of the government that the defendant Hays was not authorized to issue drafts and certificates of deposit; and I say to you that, while there was no specific authority given by the board of directors to Hays to issue these obligations of the bank, yet he had authority to issue drafts and certificates of deposit. His authority in this respect arose out of the general conduct of the business of the bank; but he did not have authority to issue drafts or certificates of deposit, except in accordance with the custom of the bank, and no action of the directors could authorize him to issue drafts or certificates of deposit for the purpose of injuring or defrauding the bank.
As respects the drafts referred to in counts 32, 33, 34, 35, and 36, they were issued, four of them to the Decatur Buggy Company, and one to Elwood, who was at the time president of the Decatur Buggy Company. As to these, the defendant Hays claims that they are exactly similar transactions to those de scribed in counts 19 to 31, inclusive, and represented the proceeds of certain commercial paper received by the Decatur Buggy Company in the usual course of business, and by it sent to the Flickinger Wheel Company, to be discounted in the Galion National Bank on the indorsement of the Flickinger Wheel Company for the benefit of the Decatur Buggy Company; that in the cases described in counts 19 to 31, inclusive, to which I have already referred, the proceeds of this commercial paper were passed to the credit of the Flickinger Wheel Company, and the Flickinger Wheel Company thereupon made checks to the Decatur Buggy Company for the amount of the proceeds. As I have already stated, the crime alleged in counts 19 to 31, inclusive, is based upon the payment of these checks when the Flickinger Wheel Company did not have the amount of them to its credit. As to the drafts referred to in counts 32 to 36, inclusive, they likewise represented proceeds of this commercial paper of the Decatur Buggy Company, indorsed by the Flickinger Wheel Company; but, on account of the absence of the defendant Flickinger, there was no one authorized to draw the checks of the Flickinger Wheel Company and therefore, instead of passing the proceeds of this commercial paper to the credit of the Flickinger Wheel Company, in three instances drafts on the Commercial National Bank of Cleveland, and in the other instances an order on the Galion National Bank itself, were sent directly to the Decatur Buggy Company by the defendant Hays, and in due course of business were paid out of the funds of the Galion National Bank. Now I say to you that if, at the time that Hays made these drafts, he discounted the paper of the Decatur Buggy Company in the belief that the paper was good and would be paid, then I say to you he acted in good faith and with the authority of the board of directors; for, under the custom existing in that bank, he had authority to discount such paper, and to pay to the company entitled to the proceeds the amount coming to it, either by passing such proceeds to the credit of its account, or by giving it drafts on the bank's correspondents.
Counts 1, 2 and 3 refer to a certificate of deposit for $10,000, issued under the direction of Hays on the 12th day of January, 1904, to the defendant Flickinger. The first count charges the unlawful issue, the second count charges the unlawful putting forth, and the third count charges the unlawful issuing and putting forth, of this certificate. If a crime was committed by either or both of these parties in respect to this certificate, under this indictment only one crime was committed. The three counts are put into the indictment for the purpose of charging the same offense in several different ways. If you should find, under the instructions that I have given you and am about to give you, that the defendants committed the crime of unlawfully issuing, or putting forth, or both, this certificate of deposit, you will have performed your duty if you find them guilty on any one of these three counts. I have already told you that the defendant Hays had general authority to issue certificates of deposit; that is to say, he had authority to issue certificates of deposit in the usual course of business, according to the custom of banking as carried on in that bank. But he did not have authority to issue certificates of deposit in violation of ordinary banking methods, with intent to conceal from the directors the fact that they were so issued, and with intent to injure or defraud the bank. The defendant Hays claims that this certificate of deposit was issued to the defendant Flickinger on the faith and the basis of a note for a like amount which the defendant Flickinger then and there gave to the bank, that he believed Flickinger to be solvent, that he took the note in good faith, and that, as it was a note drawing 6 per cent. interest, the same rate which the certificate drew, the proceeds of that note, which Flickinger was entitled to have passed to his credit, would be $10,000, and thus furnish a proper basis for the issuance of the certificate for that amount.
It is in evidence that for some reason this note was not entered in the discount register, that the certificate of deposit did not have the regular serial number which a certificate of deposit of that date would in the ordinary course of business have, and that the certificate of deposit was not entered on the books of the bank, according to its custom. Whether these circumstances are explained to your satisfaction is wholly a question for you to determine. The defendant insists that the purpose of issuing the certificate, on the faith of the note of Flickinger, was to provide funds with which to wipe out, to that extent, an overdraft of the Flickinger Wheel Company, then existing. The government claims that the failure to enter the note on the discount register