Evans v. United States (153 U.S. 584)/Dissent Field

Mr. Justice FIELD dissented. See opinion, 14 Sup. Ct., infra.

I am unable to concur in the judgment of the court in these cases, or in the opinion upon which it is founded. The two cases arise out of the same state of facts, are similar in essential particulars, and were argued together.

The defendant below, Nelson F. Evans, the plaintiff in error here, was for some years previously to May, 1891, a director of the Spring Garden National Bank,-a national banking association doint business by that name at Philadelphia, in the state of Pennsylvania. The bank failed on the 9th of May, 1891, and passed into the hands of a receiver. A year afterwards, in May, 1892, the defendant Evans was indicted for various acts in alleged violation of section 5209 of the Revised Statutes of the United States, which is as follows:

'Sec. 5209. Every president, director, cashier, teller, clerk, or agent of any association who embezzles, abstracts, or wilfully misapplies any of the moneys, funds, or credits of the association, or who, without authority from the directors, issues or puts in circulation any of the notes of the association, or who, without such authority, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree, or who makes any false entry in any book, report, or statement of the association with intent, in either case, to injure or defraud the association, or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent appointed to examine the affairs of any such association, and every person who with like intent aids or abets any officer, clerk, or agent in any violation of this section, shall be deemed guilty of a misdemeanor, and shall be imprisoned not less than five years, nor more than ten.'

The indictments originally contained several hundred counts, charging over 150 different offenses, but as to a large number of the counts a nolle prosequi was entered. The number retained was still large, amounting to 23 in one indictment, and 57 in the other. To them, demurrers were filed and overruled. The defendant was then arraigned, and pleaded not guilty; and, upon the issues, a jury was called, and trials had, which resulted in conviction in both cases. A motion for a new trial in each case was overruled. Subsequently, a motion in arrest of judgment, upon substantially the same grounds as those urged in support of the demurrers prior to the pleas, was made. This motion was also overruled; and the defendant was then sentenced, upon the conviction, under one of the indictments, to imprisonment in the penitentiary for the term of five years, and, upon the conviction under the other indictment, to a like imprisonment for the term of two years following the expiration of the previous imprisonment. The cases are brought to this court upon writs of error to review these judgments.

The counsel of the defendant has given the court much assistance in the consideration of the cases, by the careful analysis he has made of the different counts. These are so numerous, presenting in many of them the same charge with confusing variations, as to obscure, rather than to render clear, the real offenses intended.

In the indictment in Case No. 923, 14 Sup. Ct. 939, the offense charged against the defendant in the first four counts is set forth in the most general way. In the first of these four, the defendant is charged, as a director, with willfully misapplying the funds and credits of the bank. In the second, he is charged with conspiring with officers of the bank to willfully misapply its money and credits. In the third, he is charged with aiding and abetting the president of the bank to misapply its moneys, funds, and credits. In the fourth count, he is charged with aiding and abetting the cashier of the bank in a similar misapplication. A demurrer was interposed to each of these four general counts on the ground that it did not specify the means whereby the alleged misapplication was made, and show that they were unlawful.

The remaining counts of the indictment are more specific, some of them charging the defendant, as a director, with misapplying moneys, funds, and credits by depositing checks and obtaining fictitious credits thereon; others charging him with aiding and abetting the president in misapplying funds and credits in the same manner; others, with aiding and abetting the cashier in a like misapplication of the funds; others, with aiding and abetting the president in misapplying funds by surrendering notes; others, with aiding and abetting the president in misapplying the funds by discounting unsecured notes of the defendant; others, with misapplying the funds through overdrafts; others, with aiding and abetting the president to misapply the funds through overdrafts.

In the indictment in Case No. 922, 14 Sup. Ct. 934, the defendant in some of the counts is charged with aiding and abetting the cashier in misapplying the funds of the bank by surrendering to the defendant unpaid notes, which the bank had discounted, and still held, without receiving for them the amount thereof, or any part of it; in some, also, with aiding and abetting the cashier to misapply the funds by discounting unsecured notes; in some, also, with aiding and abetting the cashier to misapply the funds through overdrafts.

For the disposition of these cases, it is not necessary to pass upon each count separately. In the first instance, the general counts will be considered, and then an examination made as to the sufficiency of the specific counts upon which the government chiefly relies to sustain the prosecution. If they will not bear the scrutiny given to them, none will. The grounds of the demurrer to them will be designated when the counts are separately considered.

With reference to indictments for statutory offenses, there are certain rules which govern their construction. It is usually sufficient, in such cases, to set forth the offense in the language of the statute, if it be accompanied by a statement of such facts and circumstances as will inform the accused of the specific offense, coming under the general description of the statute, with which he is charged. He must be apprised by the indictment, with reasonable certainty, of the nature of the accusation against him, in order that he may be able to prepare for his defense, and also, in case of conviction or acquittal, that he may plead the judgment in bar of further proceedings. U.S. v. Simmonds, 96 U.S. 360; U.S. v. Hess, 124 U.S. 483, 8 Sup. Ct. 571.

A mere statement of the offense in the words of the statute, without a statement of the accompanying facts and circumstances essential to constitute a specific offense, will be insufficient. As said by this court in U.S. v. Carll, 105 U.S. 611, speaking through Mr. Justice Gray: 'In an indictment upon a statute, it is not sufficient to set forth the offense in the words of the statute, unless those words, of themselves, fully, directly, and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offense intended to be punished; and the fact that the statute in question, read in the light of the common law, and of other statutes on the like matter, enables the court to infer the intent of the legislature, does not dispense with the necessity of alleging in the indictment all the facts necessary to bring the case within that intent.' Numerous authorities were cited in support of the views expressed.

There is a very general test applicable to all indictments. If the facts alleged be established, or admitted to be true, and their truth is consistent with the defendant's innocence, the indictment is insufficient, however full the description in other respects. Applying this well-settled doctrine to the different counts of the indictments in these cases, there will be little difficulty in determining as to their sufficiency; yet the doctrine appears to be entirely ignored by the majority of the court, or at least set aside in these cases.

The four general counts are manifestly insufficient, as they wholly fail to aver the means by which the alleged misapplication of the funds was made by the defendant, or attempted by him, in conspiracy with the president or cashier, or in aiding and abetting them.

Upon an allegation that one has misapplied the funds of a bank, the natural inquiry would be, how,-in what manner? Until the manner in which the application was made, and the purpose of it, are shown, no misapplication can be established. There is no averment of facts in either of the counts of the indictment to show that the application of the funds was an unlawful one; and, unless it appear from the facts alleged that such was the case, the application will not constitute the offense charged. Nor is there any averment of facts to show that the bank suffered any loss or damage by the misapplication. From all that is alleged, it may have been the exercise of an unwise judgment, for which the defendant could not be charged under the statute, and injury from which may have been avoided by a subsequent replacement of the moneys.

In U.S. v. Britton, 107 U.S. 655-669, 2 Sup. Ct. 512, the words 'willfully misapplied,' used in the section upon which the present indictments were found, were considered; and the court, speaking by Mr. Justice Wood, said: 'The words 'willfully misapplied' are, so far as we know, new in statutes creating offenses, and they are not used in describing any offense at common law. They have no settled technical meaning, like the word 'embezzle,' as used in the statutes, or the words 'steal, take, and carry away,' as used at common law. They do not, therefore, of themselves, fully and clearly set forth every element of the offense charged. It would not be sufficient simply to aver that the defendant willfully 'misapplied' the funds of the association. This is well settled by the authorities we have already cited. There must be averments to show how the application was made, and that it was an unlawful one.' It follows that the demurrer to each of the four general counts was well taken, and should have been sustained.

The two cases, as stated in the opinion of the court, were originally argued here upon the sufficiency of all the counts. A reargument having been ordered, it was confined principally to the 8th, 9th, 10th, and 14th counts; and in the opinion a copy of the 8th count is given at length, as a representative one of its class, and, as in framework and structure, similar to all the counts to which the attention of the court was called.

This count, stripped of its useless verbiage, and of its adjectives imputing supposed fraudulent motives to the conduct of the defendant, and of adverbs of objurgation, is substantially this, and no more: That the defendant, Evans, did, on the 8th of May, 1891, in the district named, aid and abet the cashier of the bank to misapply an unpaid note of one Nettleton for seventyfive hundred (7,500) dollars, formerly discounted, and still held, by the bank, by surrendering and delivering it to the defendant without receiving its amount or any part thereof, and that it was done by the defendant to injure and defraud the bank. The allegation of the motive of such surrender and delivery adds nothing to the character of the act, unless its object is shown by stating the use to which the note was to be put, as that it was for cancellation or appropriation for the benefit of the defendant, or of some one other than the bank, or to accomplish some object other than to obtain its payment, renewal, or security. Nor does the count aver that a valid consideration was not received for the note, or that the bank lost by the transaction. The mere charge of an intention to misapply the unpaid note is not sufficient, without some allegation of the manner in which such misapplication was made. This was held in U.S. v. Britton, 107 U.S. 655, 2 Sup. Ct. 512. It was there said that, to constitute the offense of willful misapplication, there must be a conversion to the use of the offender, or of some one else, of the moneys and funds of the association, by the party charged. It would not be sufficient, the court added, simply to aver that the defendant willfully misapplied the funds of the association. 'There must be averments to show how the misapplication was made, and that it was an unlawful one.'

It is an old doctrine, not to be forgotten in practice or in pleading, that an act lawful in itself cannot be made criminal by imputing wrong motives to the conduct of the party. Punishment is not, in our days, inflicted for the motives for which lawful acts are done. There is no force added to the allegation of 'delivered' by the use of the word 'surrendered,' in this case, but rather its force is weakened. A surrender is usually made upon some right or claim, or upon coercion. The latter is not suggested here, and surrender is consistent with some useful purpose in the enforcement of a claim or right to the note.

Similar observations may be made of almost every count in both indictments. There is some fact which might be stated in connection with their allegations, and which would obviate their criminality, but which is omitted; and the omission, in my judgment, makes the indictments invalid.

I do not claim that it is essential that the pleader should negative every conceivable lawful delivery, such as would be unusual, though possible under some circumstances; but I do insist that a lawful delivery should be met by a negative to the natural and ordinary conduct which would be adopted by innocent parties in such cases. A note discounted at a bank, when not paid in whole or in part, is not usually surrendered to a third party without a valuable consideration, unless it be for collection, or to obtain its renewal, or security for it; and such usual action should be negatived by averment. No doctrine is more essential for the protection of a party accused of a criminal offense, and none should be more rigidly enforced, than this: that the facts alleged by way of accusation, if admitted to be true, must be inconsistent with the inference of his innocence of the offense charged, arising from the usual conduct of innocent parties in such cases.

I do not assent to the doctrine that the note might have been delivered to the defendant for a score of honest purposes, which it would be unnecessary to negative, and that, in criminal pleading, it is not required to anticipate and negative a natural and obvious answer to the accusation. Such is not the law, as I understand it.

The counts which are more specific in their allegations, and upon the sufficiency of which the prosecution chiefly relies, will now be considered. These specific counts are grouped by the prosecution into four sets. The first set consists of counts 5, 10, and 11 of the indictment in Case 923. These counts are, substantially, that the defendant, on the 8th of May, 1891, did knowingly, unlawfully, fraudulently, and willfully, and with intent to injure and defraud the bank, misapply certain of its moneys, funds, and credits for his own use and benefit, to wit, the sum of $15,333.35, in the manner and by the means following; that is to say, the defendant, being a director, did deposit and place to his credit in the bank his check, drawn by himself on the Keystone Bank in favor of the Spring Garden Bank, the amount being in excess of all the sums which he was then entitled to draw from the moneys and funds of the Keystone Bank, and by means of which check, thus deposited, he obtained a false credit upon the books of the Spring Garden Bank, and was thereby enabled, and did thereafter, draw out from that bank the sum mentioned, for his own use, benefit, and advantage, as he then well knew, contrary to the act of congress.

The three counts differ from each other in this: that the tenth count charges the defendant with knowingly and fraudulently aiding and abetting the president of the bank to misapply its moneys, funds, and credits, in the amount mentioned, by receiving on deposit, and crediting to himself, the check mentioned. The eleventh count differs only in alleging that the defendant aided and abetted the cashier of the bank in misapplying its moneys and credits in the manner mentioned. The charge is substantially the same in all three counts,-that a false credit was secured by the defendant with the bank by depositing a check drawn by him on the Keystone Bank in excess of what he knew to be his balance there, and which check was not paid. These counts are subject to the general objection that, admitting all their statements to be correct, they are still consistent with the innocence of the defendant. The counts nowhere allege that the check on the Keystone Bank was ever presented to that bank for payment. The defendant may have overdrawn his account in that bank. The check may have been in excess of all sums which he was entitled to draw, and yet it might have been paid upon presentation. There is not, in the mere fact that one overdraws his account at a bank, necessarily any evidence that the drawer intended to defrand the bank, or any other bank with which the check was deposited. It is a matter of every-day practice for depositors in a bank to overdraw their accounts. Whether checks so overdrawn will be paid may depend upon other considerations than the amount of deposits of the drawer in the bank. It would be an extraordinary position to hold that, because a man drew upon a bank for more than he knew he had on deposit, he should be charged by the holder with the commission of a fraud, before the latter had presented the check to the bank for payment, and payment had been refused. Whether or not the Keystone Bank would have paid it, had it been thus presented, may have depended upon the confidence which the bank might have entertained in the drawer's ultimate ability to pay. Though not entitled, in the words of the indictment, to draw at the time any sums whatever, yet he may have had such credit with the bank, from its knowledge of his character and habits, as to induce it to honor his check. It is within the experience of every one that checks thus drawn are often honored, even with a knowledge of the drawer's inadequate deposit. Other facts beside such knowledge by the drawer must be shown, to justify the imputation of criminal intent to him. A demurrer was interposed to the counts mentioned on the ground that they did not aver that the checks in question were presented to the Keystone Bank for payment, and that payment was refused, and that the bank thereby became a loser. In my opinion, the counts were, for that reason, insufficient, and the demurrer was well taken, and should have been sustained.

The second set of counts upon which the prosecution relies are Nos. 6, 7, 8, 9, 12, and 13 of the same indictment. These also allege that the defendant, being a director of the Spring Garden Bank, caused certain checks drawn by him upon the Keystone Bank and the Fourth Street National Bank of Philadelphia for sums greater than he was entitled to draw or obtain from them, to be deposited with the Spring Garden Bank, and placed to his credit on its books, and thereby obtained a false credit and received from that bank, for his own use and benefit, the amount of such checks. But these counts also show that each of such checks was indorsed in this way: 'For deposit to the credit of Nelson F. Evans. Received payment through the clearing house.' The purport of this indorsement is that the checks were passed by the bank through the clearing house, and paid there,-a not unusual way of collecting checks in our large cities. The same objections that were made to counts 5, 10, and 11 can be made to these counts, and also the further objection that there is an inconsistency in the allegation that thereby any false credit was obtained, the checks having indorsed on their face the statement that payment was received on them through the clearing house.

These checks are set forth in the indictment with this indorsement, and there is no allegation that the indorsement was false, or was made, or permitted to be made, by the defendant, with any intent to defraud the bank. The very face, therefore, of the checks, negatives the charge of crime, and contradicts the idea of loss to the bank. If, in answer to this view, it be said that it is alleged that the checks were not paid, it must be observed that no averment is made of their presentation for payment, or of anything to exclude the idea of negligence on the part of the bank receiving them, or that the money was not lost through the failure of the bank upon which they were drawn. The six counts differ from each other in this: that in some of them the checks are alleged to have been drawn on the Keystone Bank, and in others on the Fourth Street National Bank; and in some of the counts the misapplication is charged directly upon the defendant, and in others by his aiding and abetting the president or the cashier. On the several grounds stated, a demurrer was interposed to these counts, and in my judgment it was well taken, and should have been sustained.

The third set of counts upon which the prosecution relies are No. 14 in the indictment in Case 922, and No. 20 in the indictment in Case 923. These counts charge the defendant with aiding and abetting the president and cashier of the bank in fraudulently misapplying its funds for the use and benefit of the defendant, by receiving and discounting his note for $15,000, payable in three months, knowing that that note was not secured, and it was not paid at maturity, or at any other time. But these counts are defective in not alleging that the discounting of the note was in excess of the power of the president or cashier, or outside of their regular duties, or that the president or cashier was not the authorized officer of the bank to discount paper. Nor is it averred that the discount was procured by any fraudulent means, or even that the defendant was at the time insolvent, or knew himself to be so. On these grounds a demurrer was interposed, and in our judgment should have been sustained.

The only remaining counts upon which the prosecution relies are Nos. 14, 15, and 16 of the indictment in Case 923, and Nos. 8, 9, and 10 of the indictment in Case 922. These counts charge, in substance, that the defendant aided and abetted the president or the cashier of the bank to fraudulently misapply a large amount of its funds by surrendering to him, for his use and benefit, certain notes of one Nettleton, discounted by the bank, and held as part of its assets, without receiving for the bank the amount thereof, or any part thereof, and that such surrender was fraudulently made to injure the bank. The counts in the indictment in Case 923 charge that the defendant aided and abetted the president of the bank in the fraudulent misapplication. The counts in the other indictment charge that the defendant aided and abetted the cashier in such misapplication of the funds. These counts do not show, in either case, any application of the surrendered notes to the use and benefit of the defendant, as charged, nor do they contain any averment that the defendant did not receive the notes as agent, for collection, or to obtain their renewal, which would readily suggest themselves as an answer to the alleged unlawful surrender, or that the bank was in any way a loser thereby. The defect in these counts is substantially the same pointed out in considering the eighth count of No. 922, a copy of which is set forth in the opinion of the court.

The allegations of fraudulent conduct and motive in the transactions for which the indictments were found are repeated with wearisome frequency, yet they are of no avail, unless accompanied by a statement of facts from which such fraud must necessarily be inferred. A party is not to be condemned by the multitude or opprobriousness of the adjectives applied to his conduct or motives, unsupported by the facts, or, as said by Lord Chief Justice Holt, 'a fact that appears to be innocent cannot be made a crime by adverbs of aggravation.' Fraud is a conclusion of law from facts respecting the transaction designated, and if they do not necessarily tend to such conclusion the allegation falls to the ground, however often repeated, or with whatever amount of earnost asseveration.

Similar views are announced with great clearness and force in U.S. v. Watkins (decided by the circuit court for this district over 60 years ago) 3 Cranch, C. C. 443, Fed. Cas. No. 16,649. The defendant, who was the fourth auditor of the treasury of the United States, was indicted for devising and intending fraudulently to obtain for his private use moneys of the United States, by means of letters to and drafts on the navy agent at New York and the navy agent at Boston, and certain requisitions on the treasury of the United States, also sent by him to them; said letters, drafts, and requisitions being used as false pretenses to enable him to obtain the moneys. There were three indictments found against him, and objections were taken to the sufficiency of their allegations of fraud. In considering the objections the court said: 'Fraud is an inference of law from certain facts. A fraud, therefore, is not sufficiently set forth in an indictment, unless all the facts are averred which in law constitute the fraud. Whether an act be done fraudulently or not is a question of law, so far as the moral character of the act is involved. To aver that the act is fraudulently done is, therefore, so far as the guilt or the innocence of the act is concerned, to aver a matter of law, and not a matter of fact. An averment that the act was done with intent to commit a fraud is equivalent to an averment that the act was done fraudulently. No epithets, no averment of fraudulent intent, can supply the place of an averment of the fact or facts from which the legal inference of fraud is to be drawn. Starkie, in his late treatise on Criminal Pleadings, says: 'Whether particular circumstances constitute an indictable fraud is a question of law; and therefore, according to a fundamental rule of description in indictments, such circumstances must be set out, in order to show that the facts amount to an indictable offense.' And he quotes Archbold on Criminal Pleadings, as follows: 'An indictment for an offense against the statute must, with certainty and precision, charge the defendant to have committed acts under the circumstances, and with the intent, mentioned in the statute; and if any one of these ingredients in the offense be omitted the defendant may demur, move in arrest of judgment, or bring a writ of error. The defect will not be aided by verdict, nor will the conclusion, 'contra formam statuti,' cure it."

The charges in the two indictments, by their very number, setting forth over 75 distinct offenses, after dismissing counts for over 100 other offenses,-those retained varying from each other by confusing differences, -were calculated to embarrass and oppress the defendant in his defense. The allegations of fraud in conduct and motive not being supported by any averment of facts from which such fraud is necessarily inferable, the other allegations as to the transactions charged are, upon a reasonable construction, consistent with the innocence of the defendant. And indictments, in my opinion, ought not to be viewed with favor, which, by the very multitude of their counts, serve to embarrass and confuse the accused. If an offense cannot be stated in less than 100 counts of an indictment, I do not think that public justice will suffer if the indictment be dismissed.

My conclusion is that the indictments on all the counts retained are insufficient to hold the defendant, and that the judgment below thereon should be reversed in both cases and judgment entered upon the demurrers in each case for the defendant, and that he be discharged therefrom.