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of this transaction. The pleader seems to have proceeded upon the idea that it was wholly unnecessary to charge that any money was paid on account of this transaction, and contented himself with predicating the offense on the mere entry to the credit of the defendant.
As the District Attorney at the argument announced that he would enter a nolle as to this count, its discussion is omitted for the reasons heretofore stated.
This count alleges, in general and comprehensive terms, that between the 16th day of April, 1896, and the 16th day of November, 1898, the defendant abstracted and misapplied $150,000 of the moneys, funds, and credits of the bank. As suggested by the court at the argument, this count might properly be termed an omnium gatherum, a summing up in one general, broad, sweeping charge the aggregate of the funds which the defendant might be supposed to have wrongfully misapplied or taken from the bank. No man should be put to trial upon such a wholesale charge without specifications or particularization to indicate to him, definitely, what is intended to be proved under such charge. Such pleading in an indictment is decisively disapproved of by the Supreme Court in Batchelor v. United States, 156 U. S. 426, 15 Sup. Ct. 446, 39 L. Ed. 478.
It results that the motion to quash the counts of the indictment discussed is sustained, and that an order will be made on suggestion of the District Attorney, directing a nolle as to the sixth, ninth, twelfth, thirteenth, and eighteenth counts of the indictment.
UNITED STATES v. MARTINDALE.
(District Court, D. Kansas, First Division. January 18, 1904.)
BANKS AND BANKING--PROSECUTION FOR MIS APPLICATION OF FUNDS OF NATIONAL BANK-VARIANCE.
An indictment under Rev. St. § 5209 [U. S. Comp. St. 1901, p. 3497], against an officer or director of a national bank for willful misapplication of its funds, in order to advise the defendant of the issues to be met, must set forth all of the facts necessary to show how the misapplication was made, and that it was an unlawful one. Under such an indictment charging that the misapplication was made by the drawing of checks on the bank, and obtaining their payment when he had in fact no money on deposit, where it appeared on the trial that defendant had an apparent credit on the books of the bank sufficient to cover the checks, the government cannot impeach such apparent credit by showing that a deposit previously entered on the books to the credit of defendant's account was false and fictitious, and the entry thereof fraudulently procured by defendant; no such transaction being charged in the indictment.
John S. Dean, U. S. Atty.
C. B. Graves, L. B. Kellogg, and Frank Hagerman, for defendant.
PHILIPS, District Judge. The question submitted for decision is as follows: The defendant stands indicted under section 5209 of the 146 F.-19
Revised Statutes of the United States [U. S. Comp. St. 1901, p. 3497], so much of which as is pertinent to the case in hand reads as follows: "Every president, director, cashier, etc., of any association who embezzles, abstracts or willfully misapplies any moneys, funds or credits of the association shall be deemed guilty of a misdemeanor," etc.
The indictment, in substantive effect, charges that the defendant, being a director and vice president of the First National Bank of Emporia, in the state of Kansas, on the 13th day of September, 1898, unlawfully, knowingly, willfully, and fraudulently, with the intent to injure and defraud said banking association, without the knowledge and consent of the board of directors and committees thereof, abstracted certain of the moneys, funds, and credits of said bank for his use and benefit, and for the use, benefit, and advantage of the person and persons unknown to the grand jurors, of the sum and value of $15, the property of said bank, by the manner and means of the said defendant then and there paying and causing to be paid to certain persons to the grand jurors unknown a check for said sum of money, drawn by the defendant out of the moneys, funds, and credits belonging to said bank, said check authorizing and directing said bank to pay to the order of Charles Cross said sum; that the same was then and there willfully, wrongfully, and unlawfully appropriated and converted to the use and benefit of the defendant, and was thereby wholly lost to the said bank; that when said check was paid and caused to be paid the defendant then and there had no moneys, funds, and credits on deposit to his credit with said bank; that his account as a depositor with the bank was then overdrawn many hundreds of dollars; that there was then and there no money owing to the defendant from said bank; that the repayment thereof was not in any way secured, and the defendant had no right to draw any moneys from said bank, or to convert the same to his or any other person's use and benefit; that this was done. with the intent to injure and defraud said bank-concluding with the charge that the defendant, as such director and vice president, thereby abstracted said sum of $15 from said bank. The indictment contains 18 similar counts, for similar sums, drawn subsequently at different times, as late as the 16th day of November, 1898, aggregating about $5,078.
Under this indictment the government, after making proof of the giving of said checks to various parties by the defendant and the payment thereof by the bank, about which no controversy is made, seeks to show that while by the books of the bank there appears to have been a deposit entered to the credit of the defendant on the 1st day of August, 1898, on a deposit slip in words and figures following, to wit, "First National Bank, Emporia, Kansas. Deposit for account of W. Martindale 8-1-98, $6,000.00," the amount of which credit more than covered the aggregate of said checks so drawn and paid, said credit was fraudulently procured by the defendant without any consideration moving from him to the bank, and without the knowledge and consent of the board of directors or the discount committee of the bank, and that the same in legal effect was fictitious. This offer of proof by the government is objected to by the defendant for the reason that the
indictment, in describing the method and means of misapplying the moneys and funds of the bank, gives the defendant no notice that the integrity of said credit on the books of the bank is to be inquired into and assailed, and because the indictment alleges there was nothing to the defendant's credit in the bank. If this evidence is excluded by the court, the District Attorney conceded that the prosecution must fail under this indictment,
In the leading case of United States v. Cruikshank et al., 92 U. S. 544, 23 L. Ed. 588, it is held that where the statute itself does not employ terms describing the offense with a well known and established meaning at common law, it is not a sufficient compliance with the sixth amendment to the federal Constitution, which demands that in criminal cases prosecuted under the laws of the United States the accused has the constitutional right to be informed of the nature and cause of the accusation, to simply employ the generic terms of the statute. Every ingredient of which the offense is composed must be accurately and clearly alleged. "The object of the indictment is, first, to furnish the accused with such a description of the charge against him as will enable him to make his defense, and avail himself of his conviction or acquittal for protection against a further prosecution for the same For this facts are to be stated, not conclusions of law alone. A crime is made up of acts and intent, and these must be set forth in the indictment with reasonable particularity of time, place, and circumstances." Bishop, in his work entitled New Criminal Procedure (volume 1), epitomizes the rule of pleading in indictments as follows:
* * *
"The facts in allegation must be the primary and individualizing ones, and therefore the pleader must set out the primary facts, disconnected from the law. (Sec. 331) All the facts which constitute the crime should be given. (Sec. 509) The protection of the innocent is the highest duty of the government, and an innocent man, as every defendant is presumed to be until convicted, can know nothing of what is to be brought against him beyond what is set down in the indictment. Hence, the precise and full allegation, which one conscious of crime would not need, is essential to him who would make a just defense against a false charge; and such, in the eye of the law, is every indicted person previous to conviction. (Sec. 517) The indictment must be in distinct and full terms, so plain as to preclude the necessity of guessing at the meaning. (Sec. 518) Every fact which is essential in the prima facie case of guilt must be stated; otherwise there will be at least one thing which the accused person is entitled to know whereof he is not informed. And that he may be certain what a thing is, it must be charged expressly, and nothing left to intendment. All that is to be proved must be alleged. (Sec. 519)."
Accordingly, it has been uniformly ruled that an indictment predicated of section 5209, Rev. St., under the banking law, for the misapplication or abstraction of the funds of a bank, as these terms have no such technical meaning, like the word "embezzle" as used at common law and in statutes, or the words "steal, take, and carry away," must "specify the particulars of the application, so as to distinguish that charge in the indictment as willful and criminal from those others contemplated by the statute which are unlawful but not criminal." And it is held "to be of the essence of the criminality of the misapplication
that there should be a conversion of the funds to the use of the defendant, or of some person other than the association, with intent to injure and defraud the association, or some other body corporate or natural person." Therefore an indictment founded on these offenses must show "how the misapplication was made, and that it was an unlawful one. Without such averments there is no sufficient description of the exact offense with which the defendant is charged, so as to enable him to defend himself against it, or to plead an acquittal or conviction in bar of a future prosecution for the same cause." United States v. Britton, 107 U. S. 655, 669, 2 Sup. Ct. 512, 27 L. Ed. 520; United States v. Northway, 120 U. S. 327, 332, 7 Sup. Ct. 580, 30 L. Ed. 664; Batchelor v. United States, 156 U. S. 426, 15 Sup. Ct. 446, 39 L. Ed. 478.
The contention on the part of the government is that in no form of pleading, including an indictment, is the pleader required to set out his evidence; and in support of the allegation that when the defendant drew checks in question he had no moneys or credits to his account with the bank, when he offers evidence falsifying the $6,000 entry of credit on the books of the bank, of date August 1, 1898, showing that it was in point of fact wholly fictitious and without consideration, such proof is within the allegations of the bill, as it tends, as matter of evidence, to support the general allegation of a willful and false misapplication of the funds of the bank, by drawing checks thereon when in fact he had no money or credits to his account therein. The principal reliance in support of this broad proposition is the language employed by Judge Jackson in United States v. Harper (C. C.) 33 Fed. 484, as follows:
"Loans made and credits given in bad faith, for the purpose of defrauding the bank or to enable him to convert the same to his own use and benefit, or for the use and benefit of another, would be an unlawful and criminal exercise of authority. The form of a loan or giving of credit upon the books of the bank may be adopted as a cover and pretense to conceal a fraudulent transaction; and when resorted to for that purpose, and the moneys of said association are withdrawn by such means. and converted to the officer's own use, whereby injury results to the bank, he is guilty of a criminal act. A false and fictitious credit given to himself or to others acting for his benefit is no credit in the sense of the law. It neither confers rights in favor of the party to whom it is given, nor imposes obligations on the bank. The form which such a transaction may take, the methods adopted to reach the fraudulent ends, or the instrumentalities employed-whether consisting of one act or a succession of acts--to accomplish the fraudulent purpose, in no way changes or alters the character of the act. The law looks through forms, devices, and contrivances to results. No system of bookkeeping, however adroitly or cunningly devised, can give validity to a fraud. If, therefore, fictitious or fraudulent credits were given upon the books of the bank, either to the defendant or to other persons acting for him, neither he nor they acquired thereby any right to the funds of the bank represented by such credits. A credit upon the books of the bank, to be valid and create the relations of creditor and debtor between the parties having such credits and the bank, must represent value received by the bank in the shape of actual cash, or what is honestly deemed its equivalent. It must represent bona fide indebtedness of the bank. Such a credit obtained by an unauthorized charge or credit ticket, without consideration passing to the bank, is no credit in the eye of the law; and when the funds of the bank are drawn out under such a credit, they are wrongfully obtained."
It is to be kept in mind, however, that the learned judge was not discussing the question of pleading in an indictment, but rather the effect of such evidence. He was speaking in respect of an indictment predicated of the direct charge of a false entry made in the books of the bank. The only information given us by the report of the case is that, "the counts relating to false entries charge intent to defraud the bank or deceive its officers." It must be assumed that the indictment set out, in conformity to the requirements of established rules heretofore discussed, a description of the false entries, how and when made, with the essential precision, coupled with the specific charge that it was done with intent to defraud and injure the bank. No conviction could be had on such false entries without such descriptive allegations in the indictment, directly predicated of such distinct offense, under section 5209 of the banking statute. Whereas, in the case at bar it is sought to enter into proof of such entry, to show that it was false, fraudulent, and fictitious, without any allegation whatever of its character, when or how done, or with what intent, or on what consideration, when concededly without falsifying said entry no conviction can be had under the pending indictment.
Even in civil actions it is well settled that fraud respecting the identical act to be avoided must be pleaded before it becomes an issuable fact. It cannot be pleaded in general terms, but the essential constitutive facts must be specified. "Fraud is never presumed, and in order to entitle a party to relief either at law or in equity on that ground it is essential that the fraud be distinctly alleged in the pleadings, so that it may be put in issue, and evidence thereof given. * In the absence of such an allegation, evidence of fraud will not be received at the trial." 9 Enc. of Pl. & Prac. 684, 685. "The reason of this rule is that fraud is a conclusion of law from the facts stated, and it is a well-settled rule of pleading that facts, and not legal conclusions, are to be pleaded. Mere general averments of fraud or the fraudulent conduct of a party, without the facts, do not constitute a statement upon which the court can pronounce judgment." Id. 686, 687. "Every material fact to which the plaintiff means to offer evidence ought to be distinctly stated in the premises. If fraud is charged, it must be distinctly and clearly set out.' Story, Eq. Pl. par. 28, 251; Noonan v. Braley, 2 Black (U. S.) 499, 17 L. Ed. 278; Knox v. Smith, 4 How. (U. S.) 298, 311, 11 L. Ed. 983; Brooks v. O'Hara (C. C.) 8 Fed. 529, 532; Hazard v. Griswold (C. C.) 21 Fed. 178, 179. So in Phelps v. Elliott (C. C.) 35 Fed. 455, 461, it is said:
"The proofs must be according to the allegations of the parties, and if the proofs go to matters not within the allegations, the court cannot judicially act upon them as a ground for decision, for the pleadings do not put them in contestation. * * * A party can no more succeed upon a case proved but not alleged than upon a case alleged but not proved."
If this were a proceeding in equity to compel restitution of the money covered by the checks in question, on the ground that the defendant at the time had no credit in the bank entitling him to draw on