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the bank, when the books of the bank as a matter of fact showed that at the time the checks were drawn there was an apparent credit, of anterior specific date, the entry of a sum to the defendant's credit sufficient in amount to cover such checks, if it were the purpose of the complainant to attack such entry as fraudulent, false, and fictitious, by all the established rules of pleading he would be required, by direct averments in the bill, to falsify the entry in order to open up the account for rectification before any such proof could be admitted. 1 Enc. Pl. & Prac. 107; Bispham's Prin. of Eq. (5th Ed.) § 486. Indeed, there is authority from which the conclusion might be drawn that where such credit entry is given on the books of a bank, and the depositor receives from the bank the usual checkbook, in which said deposit was entered by the receiving teller of the bank (a custom so universal as to well warrant the court in concluding it was observed in this instance) on which the customer is drawing, the checkbook being posted, the transaction partakes of the nature of an account stated, the effect of which can only be avoided in equity by a bill surcharging or falsifying it. Leather Mfrs. Nat. Bank v. Morgan, 117 U. S. 96, 6 Sup. Ct. 657; 29 L. Ed. 811; McKeen v. Bank, 74 Mo. App. 281, 286; 1 Morse on Banks and Banking (4th Ed.) § 291.
The case of Hoyt v. State, 50 Ga. 313, 315, is an apt illustration of the application of these protective principles of pleading to a criminal indictment. The defendant was charged with receiving specific sums in specific months from a railroad company for the purpose of paying for railroad ties, which sums he converted and embezzled. The evidence was that he reported to the company proper disbursements of the amounts thus received, but as a matter of fact in some instances he did pay to persons from whom he reported purchases less than the sums reported, and in some instances reported, purchases from fictitious persons. The court said that:
"Under an indictment making a general charge of fraudulent conversion, as stated, we do not think it competent for the prosecution to prove that the accused had reported to the bailor special payments as having been made to particular persons, in the performance of his duty as bailee, and that such payments were not, in fact, made to the amounts so reported; or, that there were no such persons as those to whom the payments were reported to have been made. Each of such fraudulent acts would be a crime, and proof thereof would be sufficient to sustain a conviction, and the defendant should be put upon notice of such charge. * ** If the state be aware of such acts, so as to be prepared to prove them on the trial, it would have the same knowledge and the same testimony so as to frame the indictment, that it may contain whatever is necessary to put the counsel on notice of that with which he is charged and of which he is to be convicted. Even in civil cases such a rule of pleading obtains. No trustee who has made his returns is liable to have them attacked, unless the notice is given in the proceedings against him. If he has omitted to make a proper charge against himself, a specific allegation must be made thereof, by way of surcharging, so as to hold him liable. If he has given himself a credit which is false, or to which he is not in law entitled, the proceedings against him must allege it by a charge falsifying it. If this be the liberal rule in a civil case, there should be as equally a benign one in a criminal procedure. *** The testimony offered and objected to was that the defendant's books showed payments to certain persons in 1870, and that there were no such persons. There were three of this
class that were claimed to be proven not to exist. If it were a fact, in each case it was a crime proved, upon which a conviction could be founded. There were then three distinct offenses, each one independent of the other, each sufficient upon which to rest indictment and conviction, and yet of neither was there any charge or notice until the testimony was offered. The same may be said of the testimony as to larger credits being given by the defendant to himself than the amounts actually paid. That was sufficient to show fraudulent conversion in each case, and to support indictments charging them and convictions thereon. It might not be going too far to say that it is a good if not the true rule that where a specific act is an offense under the Penal Code, and that act is to be made by proof, the ground on which a conviction is to be had constituting the crime to be punished, that specific act should be charged in the indictment. It is not necessary that the indictment should allege or show the testimony which is to be used on the trial, but it should set forth sufficiently the act committed by the accused which constitutes the offense charged, and for which act the conviction is sought."
So in Commonwealth v. Shepard, 1 Allen (Mass.) 578, 583, the court, speaking of the charge of embezzlement against the treasurer of a bank, where the evidence might perhaps produce some result of incriminating evidence of the transaction in a different form, said:
"The government was bound to prove the exact offense as it was charged in that count. Doubtless there was proof that the defendant had been guilty of making false entries in his books, and perhaps evidence which tended to show previous acts of embezzlement, but he was not convicted on any count in the indictment which charged such offenses."
Turning to the indictment at bar, it is manifest from the condition in which the question to be decided arises that the real controversy in this case is as to the validity of the transaction of August 1, 1898, by which the $6,000 credit was obtained. It is the initial and central fact, which draws to it the decision of this case. That transaction, under the proof offered in this case, would show a false entry, within the meaning of said section 5209, and would constitute a distinct offense under the statute. Coffin v. United States, 162 U. S. 683, 684, 16 Sup. Ct. 943, 40 L. Ed. 1109; Agnew v. United States, 165 U. S. 52, 17 Sup. Ct. 235, 41 L. Ed. 624. When this indictment was drawn the statute of limitations had run against the offense of such false entry.
It may be conceded, however, that the giving of the checks and drawing thereon the money from the bank, was the culminating act of the offense of misapplication. But the fact of such entry having been made on the 1st of August, 1898, occasions no dispute, and the giving of the checks by the defendant on the bank occasions no dispute; but the real question which the government seeks to have litigated in this indictment is as to whether or not the entry of August 1, 1898, was false and fictitious. Ostensibly the defendant had a credit of $6,000 on the books of the bank, entitling him to draw the checks in question. Therefore, as a part of the case to be made out by it, before it can go to the jury, the government admits that it must go back to the creation of this credit account on the books of the bank (as the books themselves, which the government must put in evidence, show this credit), assail and demolish it. assail and demolish it. It must show that by some effective fraud, such as deceit or false representation or
conspiracy, the defendant brought about this entry. It must show that the transaction was wholly fictitious, without consideration, procured without the knowledge and consent of the governing board of directors or the discount committee, designed and intended to defraud the bank of its moneys and funds, and that in furtherance of this scheme the checks were issued and the money withdrawn from the bank. The transaction of August 1, 1898, is therefore the initial point, a part of the means-the method-by which the defendant abstracted the money of the bank. If the government is to rely upon this proof, as it must, to make out a case, what right had the pleader to omit any reference thereto in the indictment? Under its contention, the scheme to defraud was necessarily composed of two parts-first, the fraudulent wrongful obtaining of the credit shown by the bankbooks; and second, the withdrawing therefrom the money based on this credit, as any bank teller of the bank, on presentation of checks drawn by the defendant, would treat such credit account as prima facie correct. It seems to me that the fraudulent schemethe method-by which the false entry was made and the money abstracted constitute an indivisible unit, and cannot be halved, nor in less degree subdivided.
There is nothing on the face of the indictment to indicate to the defendant that this initial substantive transaction of August 1, 1898, was to be inquired into and its integrity determined by the jury on the trial of this case. It is true that in determining the question of the honest or evil motive-the intent of the defendant when he gave the checks in question a wide latitude of inquiry may be indulged. Within reasonable limits, the government might be indulged to go into many of the antecedent acts and dealings of the defendant with the funds of the bank, and his methods of obtaining credit and moneys therefrom. This, however, would come under the head of the quo animo as to the particular instance on trial. But this rule does not trench upon the inflexible requirement in criminal indictments, that in describing the methods by which the defendant, as a director, misapplied or abstracted the funds of the bank, the indictment should, with reasonable certainty, specify every material requirement of the fraudulent scheme characterizing the particular transaction to be tried, and under the rules heretofore stated the government should be limited to the acts specified in the indictment. It may be conceded that the indictment on its face is good in charging a misapplication or abstraction of the funds of the bank, in that, in substance, it charges that the defendant, with intent to defraud the bank of its moneys, gave the checks, and thereby enabled the drawee to obtain the money of the bank, knowing that the defendant had overdrawn his account, and had no credit to him in the bank, with no purpose to replace the fund. But the question presented for decision is, can the defendant be held, in the preparation of his defense, to anticipate that under the mere charge of giving the checks and drawing out the money of the bank, when he had overdrawn his account, and had nothing to his credit in the bank, he should come to trial prepared to show that the credit of $6,000 of
August 1, 1898, placed to his account on the books of the bank long anterior to the giving of the checks, was genuine and honest? If so, where would be the limit to such inquiry? There might be several anterior entries of credits to the defendant's account with the bank, the last of which might be genuine and some of the others fraudulent and false. How many of them or which particular entry may the government assail, without premonition to the defendant, in attempting to make out the case presented under the indictment?
This court is advised from 18 counts in the first indictment against defendant, the sufficiency of which it heretofore passed on, that this defendant had large dealings of debits and credits with said bank, extending over a long period of time anterior to the giving of the checks in question. If the government, under the present indictment, can go into proof of the integrity of the one, why may it not as to any other of the series by way of showing, as the sum of the result, that the defendant was not in law and fact entitled to draw on the bank the several checks in question? If such a range of inquiry is to be indulged to the government under this indictment, it does seem to the court that no defendant's liberty would be safe against the probability of surprises being sprung on him at the trial. One of the cardinal reasons assigned by the text-writers and the courts for requiring such indictments to set out with reasonable certainty of specification the essential acts constitutive of the fraud is that in case of another prosecution the defendant may avail himself of the record by plea of autrefois acquit or convict. It therefore becomes all-important to a defendant that the whole of the particular transactions leading directly to the constitution of the offense should be embraced within the allegation of the indictment. There ought not to be any uncertainty about it. Nor ought the defendant to be driven in his plea of former jeopardy to proof in pais, with its attendant difficulties and disputes, when the government seeking his conviction, in the interest of humanity and justice, being in possession of the facts when the indictment was drawn, could so easily make the proof a matter of record evidence by the allegations of the indictment. In other words, it would have been the exact method, in order to get the alleged false entry of August 1, 1898, in evidence, for the indictment to have alleged, in effect, that the defendant, intending to defraud and injure the bank, and obtain its moneys without consideration, procured an entry to be made on the books of the bank of date August 1, 1898, by which it was made to appear by a deposit slip that he had on that day placed and deposited with the bank to his credit the sum of $6,000, when in truth and in fact he had placed no such sum with the bank; that the same was without consideration, fictitious, and fraudulent; and that in furtherance of his said scheme to defraud and injure the bank by obtaining its moneys he did afterwards issue the checks in question, whereby the moneys of the bank were withdrawn, and misapplied to the use of the defendant.
The court holds that the evidence in question, proposed to be offered on behalf of the government, is inadmissible under the indictment.
UNITED STATES v. NEW YORK CENT. & H. R. R. CO. SAME v. NEW
(Circuit Court, S. D. New York. July 6, 1906.)
1. CARRIERS-INTERSTATE COMMERCE-REBATING-INDICTMENT.
An indictment against a railroad company for violation of the interstate commerce act (Act Cong. Feb. 4, 1887, c. 104, 24 Stat. 379 [U. S. Comp. 1901, p. 3154]), as supplemented by the Elkins act (Act Cong. Feb. 15, 1903, c. 708, 32 Stat. 847 [U. S. Comp. St. Supp. 1905, p. 599]), alleged that defendant published a sugar schedule for the transportation of sugar from New York to Cleveland at the rate of 21 cents per 100 pounds; that on a specified day the American Sugar Refining Company induced defendant to make an unlawful agreement to allow a rebate of 6 cents on sugar shipped by it to Cleveland for reconsignment, and 4 cents on sugar shipped to Cleveland as its ultimate destination; that the sugar company thereafter shipped various consignments, paid the schedule rate, and afterwards made claims on the railroad company, and was paid a rebate. Held, that such facts sufficiently showed a violation of the provisions of the act prohibiting deviations from the published rates.
2. SAME-OBSERVATION OF PUBLISHED TARIFF-WILLFUL FAILURE.
An indictment against a railroad company and the agent of certain shippers, alleging that full schedule rates were first paid by the railroad company for the transportation of certain freight, and that thereafter $920.39 was paid to the shipper's agent by way of rebates and concessions in respect to the transportation of freight under a previously made unlawful agreement, sufficiently charged that the payment of the rebate was a willful failure to observe the published tariff, and therefore stated a violation of the interstate commerce act (Act Cong. Feb. 4, 1887, c. 104, 24 Stat. 379 [U. S. Comp. St. 1901, p. 3154]), as supplemented by the Elkins act (Act Cong. Feb. 19, 1903, c. 708, 32 Stat. 847 [U. S. Comp. St. Supp. 1905, p. 599]).
Under the interstate commerce act (Act Cong. Feb. 4, 1887, c. 104, 24 Stat. 379 [U. S. Comp. St. 1901, p. 3154]), as supplemented by the Elkins act (Act Cong. Feb. 19, 1903, c. 708, 32 Stat. 847 [U. S. Comp. St. Supp. 1905, p. 599]), providing that a corporation engaged in interstate commerce and its agents may be criminally liable for giving rebates, a carrier and its agents may be prosecuted for the same offense in a single indictment. 4. CONSPIRACY-CARRIERS-GIVING AND ACCEPTING REBATES-INDICTMENT.
Under the Elkins act (Act Cong. Feb. 19, 1903, c. 708, 32 Stat. 847 [U. S. Comp. St. Supp. 1905, p. 599]), abolishing imprisonment as a punishment for offenses committed against the acts regulating interstate commerce, an indictment alleging that the agents of a shipper and the agents of a railroad company engaged in interstate commerce stipulated to give and receive rebates on the transportation of sugar from New York to Detroit, and thereafter gave and received such rebates in pursuance of such fraudulent conspiracy, merely alleged a violation of the interstate commerce act as amended by the Elkins act, and was therefore not sustainable as alleging a conspiracy to commit an offense against the United States, punishable by imprisonment, under Rev. St. § 5440 [U. S. Comp. St. 1901, p. 3676].
5. STATUTES-PROSPECTIVE OPERATION.
Act Cong. June 29, 1906, amending the Elkins act (Act Cong. Feb. 19, 1903, c. 708, § 1, 32 Stat. 847 [U. S. Comp. St. Supp. 1905, p. 599]) by striking the provision abolishing imprisonment for offenses under the acts to regulate commerce, and providing a punishment of imprisonment for a term not exceeding two years, etc., was prospective only in operation.