CRIMINAL LIABILITY OF OFFICERS

106. The National Bank Act denounces as crimes certain acts on the part of the officers, clerks and agents of national banks-among such acts being the false certification of checks; the embezzlement, abstraction, and willful misapplication of the bank's funds; the unauthorized issue of the notes of the association, or of certificates of deposit; the unauthorized drawing, making, or assignment of certain instruments, etc.; and the making of certain false

entries.

Wrongfully Certifying Check

The National Bank Act 147 makes it unlawful for any officer, clerk, or agent of any association to certify any check drawn upon the association, unless the person or association drawing the check had on deposit with the association, at the time of drawing it, an amount of money equal to the amount specified in the check, and provides that any officer, clerk, or agent of such association, who shall willfully violate the provisions of the section, or who shall resort to any device, or receive any fictitious obligation, direct or collateral, in order to evade the provisions thereof, or who shall certify checks before the amount thereof shall have been regularly entered in the credit of the dealer upon the books of the association, shall be guilty of a misdemeanor.148

147 Rev. St. U. S. § 5208; Act July 12, 1882, c. 290, § 13, 22 Stat. 166 (U. S. Comp. St. 1901, p. 3497).

148 Section 5208 does not create a criminal offense, but, read with Act July 12, 1882, c. 290, 22 Stat. 166 (U. S. Comp. St. 1901, p. 3497), the two create one offense. United States v. Heinze (C. C.) 161 Fed. 425.

To constitute a willful violation, a wrongful intent is essential; and an officer certifying, believing in good faith, and having reasonable grounds, that the drawer had a sufficient deposit, could not be

Embezzlement, etc.

The act 149 provides that every president, director, cashier, teller, clerk, or agent of any association, who embezzles, 150 ab

convicted, though the account was overdrawn. Spurr v. United States, 174 U. S. 728, 19 Sup. Ct. 812, 43 L. Ed. 1150.

Defendant can show a positive agreement on the part of the officers that the overdraft caused by the certified check should be practically treated as a loan from day to day, secured by collateral, and that before issue of the check an ample amount of cash was deposited. Potter v. United States, 155 U. S. 438, 15 Sup. Ct. 144, 39 L. Ed. 214.

Knowledge that the false certification is in violation of the law is not essential; the intent being imported from knowledge of the facts. Chadwick v. United States, 141 Fed. 225, 72 C. C. A. 343.

While it is a settled rule that an indictment for conspiracy will not lie where a plurality of agents is logically necessary to complete the crime which it was the object of the conspiracy to commit, such rule does not apply to an indictment under Rev. St. U. S. § 5440 (U. S. Comp. St. 1901, p. 3676), for a conspiracy between the defendant, who had no official connection with a national bank, and an officer of such bank, to violate Rev. St. U: S. § 5208 (U. S. Comp. St. 1901, p. 3497), by causing a check of defendant drawn on the bank to be certified by such officer when defendant did not have a sufficient amount on deposit to pay the same. Chadwick v. United States, 141 Fed. 225, 72 C. C. A. 343.

Sufficiency of indictment, see Potter v. United States, 155 U. S. 438, 15 Sup. Ct. 144, 39 L. Ed. 214; United States v. Potter (C. C.) 56 Fed. 83; United States v. Heinze (C. C.) 161 Fed. 428. See "Banks

and Banking," Dec. Dig. (Key No.) § 256; Ceri. Dig. §§ 958-967. 149 Rev. St. U. S. § 5209 (U. S. Comp. St. 1901, p. 3497).

150 Embezzlement is a word of technical meaning. It involves the unlawful conversion by an officer, clerk, or agent of the bank of moneys, funds, or credits of the bank intrusted to him. United States v. Northway, 120 U. S. 327, 7 Sup. Ct. 580, 30 L. Ed. 664; United States v. Youtsey (C. C.) 91 Fed. 864. See, also, Claassen v. United States, 142 U. S. 140, 12 Sup. Ct. 169, 35 L. Ed. 966; McKnight v. United States, 115 Fed. 972, 54 C. C. A. 358. "Misapplication" is broader, and covers "embezzlement." Jewett v. United States, 100 Fed. 832, 840, 41 C. C. A. 88, 53 L. R. A. 568.

As to the distinction between embezzlement, abstraction, and willful misapplication, see United States v. Harper (C. C.) 33 Fed. 471;

stracts,151 or willfully misapplies 152 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

United States v. Youtsey (C. C.) 91 Fed. 864; United States v. Breeze (D. C.) 131 Fed. 915. See "Banks and Banking," Dec. Dig. (Key No.) § 256; Cent. Dig. §§ 958-967.

151 "Abstract' * * * is not a word of settled technical meaning, like the word 'embezzle.' * * * It is a word, however, of simple, popular meaning, without ambiguity. It means to take or withdraw from; so that to abstract the funds of the bank, or a portion of them, is to take and withdraw from the possession and control of the bank the moneys and funds alleged to be so abstracted. This, of course, does not embrace every element of that which, under this section of the statute, is made the offense of criminally abstracting the funds of the bank. To constitute that offense, within the meaning of the act, it is necessary that the moneys and funds should be abstracted from the bank without its knowledge and consent, with the intent to injure or defraud it, or some other company or person, or to deceive some officer of the association, or an agent appointed to examine its affairs." United States v. Northway, 120 U. S. 327, 7 Sup. Ct. 580, 30 L. Ed. 664. See "Banks and Banking," Dec. Dig. (Key No.) § 256; Cent. Dig. §§ 958-967.

152 "Willful misapplication * * means something different from the acts of official maladministration referred to in section 5239, Rev. St. U. S. (U. S. Comp. St. 1901, p. 3515), and it must be a willful misapplication for the use or benefit of the party charged, or of some person or company, other than the association, with intent to injure and defraud the association, or some other body corporate or some natural person, and it must be charged in the indictment that such misapplication was so made; and where the counts in an indictment charge the fraudulent purchase by the defendant, as president, of certain shares of stock 'in trust for the use of said association, and which shares of stock were not purchased as aforesaid in order to prevent loss upon any debts theretofore contracted with said association in good faith,' they do not charge a criminal misapplication of funds, but a mere maladministration of the affairs of the bank." United States v. Britton, 107 U. S. 655, 2 Sup. Ct. 512, 27 L. Ed. 520. See, also, United States v. Britton, 108 U. S. 193, 2 Sup. Ct. 526, 27 L. Ed. 701; United States v. Northway, 120 U. S. 327, 7 Sup. Ct. 580, 30 L. Ed. 664; Batchelor v. United States, 156 U. S. 426, 15 Sup. Ct. 466, 39 L. Ed. 478.

As the procuring of a dividend by a banking association, when

the association,158 or who, without such authority, issues or puts forth any certificates of deposits, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree, or makes any false entry in any book, report, or statement of

there are no net profits to pay it, is not a willful misapplication of the moneys and funds of the association, under section 5209 (page 3497), a conspiracy to commit such act is not made punishable by section 5440 (page 3676). United States v. Britton, 108 U. S. 199, 2 Sup. Ct. 531, 27 L. Ed. 698.

Persons not officers or agents may be aiders and abettors. Coffin v. United States, 156 U. S. 432, 15 Sup. Ct. 394, 39 L. Ed. 481. See, also, Evans v. United States, 153 U. S. 584, 14 Sup. Ct. 934, 38 L. Ed. 830. A charge that, if defendant "either embezzled or willfully misapplied" the funds or credits of the bank, "whereby, as a necessary, natural, or legitimate consequence, its capital was reduced, or placed beyond the control of the directors, or its ability to meet its engagements or obligations, or to continue its business, was lessened or destroyed, the intent to injure or defraud the bank may be presumed," is correct, as a statement of law. Agnew v. United States, 165 U. S. 36, 17 Sup. Ct. 235, 41 L. Ed. 624.

An indictment for the willful misapplication of funds of a bank by an officer, with intent to defraud, by receiving and discounting with its money an absolutely unsecured promissory note of a named partnership, whereby the proceeds of the discount of the note were wholly lost to the bank, need not charge a conversion by the recipient of the proceeds of the discount, provided it does allege a conversion by such officer. United States v. Heinze, 218 U. S. 532, 31 Sup. Ct. 98, 54 L. Ed. 1139.

The misappropriation of the funds of a bank by an officer in the honest exercise of official discretion, in good faith, without fraud, for the advantage, or supposed advantage, of the bank, is not punishable; but if official action be taken, not in the honest exercise of discretion, in bad faith, for personal advantage, and with fraudulent intent, it is punishable. United States v. Fish (C. C.) 24 Fed. 585.

The fact that the officers of a bank which has gone into liquidation occupy the relation of trustees for creditors does not preclude

153 See United States v. Harper (C. C.) 33 Fed. 471, 476. See "Banks and Banking," Dec. Dig. (Key No.) § 256; Cent. Dig. §§ 958

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 such association,154 and every person who with like intent aids

the president, who has been appointed as agent by the shareholders, to assist in the liquidation, from being prosecuted under Rev. St. U. S. § 5209, for willfully misapplying the assets of the association. Jewett v. United States, 100 Fed. 832, 41 C. C. A. 88, 53 L. R. A. 568. The offense may be consummated by giving fraudulent credits, and the transfer of the same by checks. Rieger v. United States, 107 Fed. 917, 47 C. C. A. 61.

The discounting by the president with the funds of the bank of commercial paper known by him to be worthless or fictitious, for the benefit of an insolvent corporation of which he is an officer, and with intent to injure and defraud the bank, is a willful misapplication of its funds. Flickinger v. United States, 150 Fed. 1, 79 C. C. A. 515. The officers possess no authority to permit a conversion of the bank's funds to the use of one of them; nor is it a defense that the money is refunded. United States v. Morse (C. C.) 161 Fed. 429.

For an officer, who is also a promoter of various enterprises, to obtain the funds of the bank on the security of unmarketable bonds of his own enterprises, at the risk of the interest of the bank, is a misapplication of the funds, which cannot be covered up by entering the transactions on the books as loans and investments. Walsh v. United States, 174 Fed. 616, 98 C. C. A. 461. See "Banks and Banking," Dec. Dig. (Key No.) § 256; Cent. Dig. §§ 958-967.

154 The assistant cashier of a bank is indictable for making a false entry in a report to the comptroller, although he is not one of the officers authorized by Rev. St. U. S. § 5211 (U. S. Comp. St. 1901, p. 3498), to make such a report; for he may be regarded as within the category of "clerk or agent," within the terms of section 5209 (page 3497). The president and assistant cashier are indictable as principals for making a false entry in a report, although neither of them actually signed or attested the report. Cochran v. United States, 157 U. S. 286, 15 Sup. Ct. 628, 39 L. Ed. 704.

Where a transaction by an officer, made with intent to defraud, is entered upon a deposit slip, the entry of the contents of such slip upon the books of the bank, by the officer personally or by his direction, is the making of a "false entry." Agnew v. United States, 165 U. S. 36, 17 Sup. Ct. 235, 41 L. Ed. 624.

The statute which punishes false entries to deceive agents ap