165 U.S. 323
February 15, 1897
C. C. Cole, for plaintiff in error.
Asst. Atty. Gen. Whitney, for the United States.
Mr. Justice PECKHAM delivered the opinion of the court.
The plaintiff in error was convicted in the United States district court for the Northern district of Iowa, under section 5209 of the Revised Statutes, of making false entries in certain reports in regard to the condition of the Commercial National Bank of Dubuque, of which he was president.
The indictment contained 16 counts, all but 6 of which were taken from the jury, the remaining counts being the forth, fifth, seventh, eighth, ninth, and tenth.
The fourth and seventh counts relate to the making of alleged false entries in the returns made, respectively, on the 5th days of August and October, 1887. Those counts (each relating to one of the two returns) charged that the plaintiff in error falsely understated the amount of overdrafts paid by the bank, and remaining unpaid to it on the date mentioned in the count. [165 U.S. 323, 324] The ninth and tenth counts relate to the same reports, and each count charges that the plaintiff in error falsely overstated the amount of loans and discounts which the bank had made, and which stood on its books at the date mentioned; the claim in fact being that, as to the sum of about $20, 000 contained in the item of 'Loans and Discounts,' the return was a false statement.
The point in dispute is in regard to which heading of the returns the items amounting to about $20,000 should have been placed under,-whether they should have been treated as overdrafts, or as loans and discounts.
The proof regarding these four counts shows that there are, in substance, two charges of making false entries under the two heads of 'Overdrafts' and 'Loans and Discounts' in the returns dated, respectively, August and October, 1887.
The fifth and eighth counts relate to the making of entries alleged to have been false in the returns for the same two quarters, and relating to the liabilities of the directors, it being therein charged that those liabilities were stated in each report at a sum much less than the actual fact required it.
The plaintiff in error, having been duly arraigned upon the indictment, pleaded not guilty, and was placed on trial at a term of the district court for the Northern district of Iowa, Eastern division, held in December, 1892, and was convicted upon the counts above mentioned.
In the course of the trial, and for the purpose of proving the guilt of the accused under the fourth count, the government gave evidence that from the books of the bank there appeared, under the head of 'Loans and Discounts,' on August 1, 1887, the sum of $490,133.78; that the plaintiff in error was the president of the bank, and, as such, signed the quarterly report to the comptroller of the currency as to the condition of the bank at the time last named; that under the head of 'Loans and Discounts' he placed in the report to the comptroller the sum of $551,048.60, which, as is seen, is an increase of about $60,000 over the amount as shown by the bank's books on that date. One of the items going to make up this increase was the sum of $20,465, and this sum was [165 U.S. 323, 325] part of a sum of $23,413.38, appearing in the bank's books to have been drawn out by certain depositors in excess of the amounts appearing in such accounts to their credit. In this way it appeared on the books of the bank that there were overdrafts, on the above date, to the extent of $23,413.38. In the return to the comptroller the amount of overdrafts was stated to have been, at the close of business on the 1st of August, 1887, $2,948.38, when in truth, as is alleged, it was the sum above named, $23,413.38. The amount taken from the above item of overdrafts was placed by the plaintiff in error in the same report under the head of 'Loans and Discounts,' thus increasing that sum by that amount. Other items were placed under that heading, so as to make up the difference between the $490,000 and the $551, 000, as above stated. The government claims the plaintiff in error had no right to take those items amounting to over $20,000 from the heading 'Overdrafts,' and place them under that of 'Loans and Discounts,' and that an intentional act of that kind was a violation of the statute, if meant to deceive. The plaintiff in error urged that he had the legal right to do as he did, and, upon being called to the witness stand, he testified substantially as follows:
Explanations of his action were given in regard to the other items in the report to the comptroller, making up the $60,000 increase of loans and discounts, the sufficiency of which it is not necessary here to discuss. It appears from the reasons stated by the plaintiff in error for changing the amounts of loans and discounts and overdrafts that the items making up the $20,000 were regarded by him as a loan by the bank, and not an overdraft; and, although it appeared from an examination of the individual accounts of depositors in the bank that more money had been drawn by certain of them than stood to their credit on the books of the bank, yet he thought this did not necessarily show that the excess of the draft over the amount of the credit was an overdraft; but that where the overdrafts had been arranged for by the [165 U.S. 323, 327] depositors with the managers of the bank, and consent been given by them that such overdrafts should be made, and would be honored to the amount agreed upon, such a transaction amounted to a loan, and not an overdraft. Under these circumstances, the court charged the jury, among other things, as follows:
The effect of this charge was to tell the jury, in substance, that the plaintiff in error was required by the law to place under the heading 'Overdrafts' the full sum which the bank books showed had been drawn out by the depositors of the bank over and above the amounts which they had severally deposited therein; that a failure to do this was a failure to comply with the law; and that a transfer of any portion of such excess from the heading 'Overdrafts' to the heading 'Loans and Discounts' was the making of a false entry, and under the general directions of the charge, if intentionally and willfully made, it was a violation of the statute, and a crime on the part of the plaintiff in error. It took away from the jury the right to even consider, upon the question of intent, the explanation given by the plaintiff in error for his changing the $20,000 item from under the heading 'Overdrafts' to that of 'Loans and Discounts.'
If the jury believed the testimony given by the plaintiff in error in regard to the arrangements which had been made by certain depositors in the bank with its proper managers to give them credit at the bank for a larger sum than appeared on the credit side of their accounts, up to a certain amount, and for a certain time, and if, under such circumstances, the plaintiff in error made the entries in good faith, and in the belief of his right so to do, they were not false entries, within the meaning of the statute, and he was not guilty of a violation thereof in making them. The charge of the learned judge substantially took away this defense, and held the plaintiff in error guilty if he knowingly and willfully placed the alleged overdrafts under the heading of 'Loans and Discounts,' a fact about which there was no dispute, ignoring thereby the right of the plaintiff in error to have the jury pass upon the question whether they had been arranged for in good faith as demand loans. This evidence had necessarily a prejudicial effect upon the defendant with regard to the other counts (fifth and eighth) of the indictment. [165 U.S. 323, 330] We think the court erred in the above charge, and the judgment must therefore be reversed and the cause remanded, with instructions to grant a new trial.
Mr. Justice HARLAN dissents.