§ 32.35 OFFENSES AGAINST PROPERTY Title 7 to ministerial employees such as tellers. There is a defense if the depositor, policyholder, or investor is adequately informed and nonetheless chooses to proceed, for example, as a stockholder seeking to shore up the institution. The cross references column lists a number of Texas statutes on receivers. The list is not exhaustive. Moreover, it does not include federal provisions, which apply to various federally-insured or otherwise federally-regulated institutions. A receivership under any of these laws is within the contemplation of this section. Generally, see Vernon's Ann. Civ.St. art. 2293 et seq. Corporation, see Vernon's Ann.Civ.St. art. 1302-5.15 and V.A.T.S. Bus. Corp. Act, arts. 7.01 to 7.08. Life, health and accident insurance company, see V.A.T.S. Insurance Code, art. 3.60. Procedure, see Vernon's Ann. Rules Civ.Proc., rules 695, 695a. Savings and loan association, see Vernon's Ann.Civ.St. art. S52a, § 8.16. Banks and Banking 20. Insurance 29, 30. Library References C.J.S. Banks and Banking 39. [Sections 32.36 to 32.40 reserved for expansion] SUBCHAPTER D. OTHER DECEPTIVE PRACTICES § 32.41. Issuance of Bad Check (a) A person commits an offense if he issues or passes a check or similar sight order for the payment of money knowing that the issuer does not have sufficient funds in or on deposit with the bank or other drawee for the payment in full of the check or order as well as all other checks or orders outstanding at the time of issuance. (b) This section does not prevent the prosecution from establishing the required knowledge by direct evidence; however, for purposes of this section, the issuer's knowledge of insufficient funds is presumed (except in the case of a postdated check or order) if: (1) he had no account with the bank or other drawee at the time he issued the check or order; or 660 Ch. 32 FRAUD $ 32.41 (2) payment was refused by the bank or other drawee for lack of funds or insufficient funds on presentation within 30 days after issue and the issuer failed to pay the holder in full within 10 days after receiving notice of that refusal. (c) Notice for purposes of Subsection (b)(2) of this section may be notice in writing, sent by registered or certified mail with return receipt requested or by telegram with report of delivery requested, and addressed to the issuer at his address shown on: (1) the check or order; (2) the records of the bank or other drawee; or (3) the records of the person to whom the check or order has been issued or passed. (d) If notice is given in accordance with Subsection (c) of this section, it is presumed that the notice was received no later than five days after it was sent. (e) An offense under this section is a Class C misdemeanor. PRACTICE COMMENTARY By Seth S. Searcy III and James R. Patterson This section expands prior law in the bad check area. Underlying this provision is the belief that the issuance or passing of a known bad check is, in itself, not only harmful to the recipient but also injurious to the community at large and is, therefore, a proper subject for criminal sanction without regard to the purpose for which the check was given. For example, even if the immediate recipient gives up nothing in return for the check, and, therefore, is not defrauded in the strict sense of that term, he may further negotiate the check, or deposit it and draw against it. This possibility places him in a precarious positior and creates a threat of harm to the general public. Another important function of the provision is the encouragement of prompt payment of dishonored checks. If the recipient of the check is defrauded, however, the issuance or passing of the bad check becomes theft under Chapter 31 and, of course, this section constitutes a lesser included offense of theft (see C.C.P. art. 37.09). The broad scope of this section obviously includes the issuance or passing of a bad check in purported payment of a preexisting debt. Article I, Section 18, of the Texas Constitution forbids imprisonment for debt. To the argument that application of Section 32.41 to a preexisting debt violates this prohibition, it need only be answered that it is the act of issuing or passing the bad check that is punished and not the failure to pay the debt. The question is further mooted since the penalty does not include imprisonment. 661 § 32.41 OFFENSES AGAINST PROPERTY Title 7 Section 31.05 (presumption for theft by check) creates a similar presumption if a bad check is used to obtain property or service. For basic development, see Notes of Decisions under Section 31.06. 1. In general The gist of the offense under the "hot check law" [Vernon's Ann.P.C. art. 567h (repealed)] was the giving of a check with intent to defraud in payment of a preexistIng debt, and under such charge it was not essential that service for which debt was theretofore incurred be described with certainty required in a charge of the fraudulent acquisition of service or property. Hutson v. State (Cr.App.1950) 227 S.W.2d 813. 2. Evidence In prosecution under 2 of Vernon's Ann. P.C. art. 567b (repealed), prior to 1951 amendment, evidence which merely showed that bad check was given for a preexisting indebtedness was insufficient to establish the intent to defraud which waз essential to a violation of the law. Colin v. State (1943) 145 Cr.R. 371, 168 S.W.2d 500. Evidence that defendant gave a check in payment of a pre-existing debt, and that check was not paid because account at bank was closed, did not justify conviction for giving of a check with intent to defraud in payment of a pre-existing debt. Hutson v. State (Cr.App.1950) 227 S.W.2d 813. (1) "Adulterated" means varying from the standard of composition or quality prescribed by law or set by established commercial usage. (2) "Business" includes trade and commerce and advertising, selling, and buying service or property. (3) "Commodity" means any tangible or intangible personal property. (4) "Contest" includes sweepstake, puzzle, and chance. (5) "Deceptive sales contest" means a sales contest: game of (A) that misrepresents the participant's chance of winning a prize; 662 1922 FDIC Rules and Regulations 8-13-76 credit must be adequately reflected on the bank's published financial statements. [Codified to 12 C.F.R. § 337.2] § 337.3 Insider Transactions. (a) Definitions.-(1) Bank. The term "bank" means an insured State nonmember commercial or mutual savings bank, and any majority-owned subsidiary of such bank. (2) Person. The term "person" means a corporation, partnership, association, or other business entity; any trust; or any natural person. (3) Control. The term "control" (including the terms "controlling", "controlled by", and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. (4) Insider. The term "insider" means any officer or employee who participates or has authority to participate in major policy-making functions of a bank, any director or trustee of a bank, or any other person who has direct or indirect control over the voting rights of ten percent of the shares of any class of voting stock of a bank or otherwise controls the management or policies of a bank. (5) Person related to an insider. The term "person related to an insider" means any person controlling, controlled by or under common control with an insider, and also, in the case of a natural person, means: (ii) An insider's parent or stepparent, or child or stepchild; or (iii) (6) Insider transaction. The term "insider transaction" means any business transaction or series of related business transactions between a bank and: An insider of the bank; (i) (iii) A person related to an insider of the bank; Any other person where the transaction is made in contemplation of such person becoming an insider of the bank; or (iv) Any other person where the transaction inures to the tangible economic benefit of an insider or a person related to an insider. (7) Business transaction. The term "business transaction" includes, but is not limited to, the following types of transactions: (i) (iii) (iv) sonnel; (v) Loans or other extensions of credit; Purchases of assets or services from the bank; Use of the bank's facilities, its real or personal property, or its per Leases of property to or from the bank; (vi) Payment by the bank of commissions and fees, including brokerage commissions and management, consultant, architectural and legal fees; and (vii) Payment by the bank of interest on time deposits which are in amounts of $100,000 or more. For the purpose of this regulation, the term does not include deposit account activities other than those specified in paragraph (a)(7)(vii) of this section, safekeeping transactions, credit card transactions, trust activities, and activities undertaken in the capacity of securities transfer agent or municipal securities dealer. (b) Approval and Disclosure of Insider Transactions. An insider transaction, 1 The phrase "series of related business transactions" includes transactions which are in substance part of an integrated business arrangement or relationship such as borrowings on a line of credit. law firm billings, or recurring transactions of a similar nature within a holding company system. FDIC Rules and Regs, § 337.2 Federal Deposit Insurance Corporation 98-440 - 77 - pt. 2 - 40 3-31-76 FDIC Rules and Regulations 1923 either alone or when aggregated in accordance with paragraph (c) of this section, involving assets or services having a fair market value amounting to more than: (1) $20,000 if the bank has not more than $100,000,000 in total assets; (2) $50,000 if the bank has more than $100,000,000 and not more than $500,000,000 in total assets; or (3) $100,000 if the bank has more than $500,000,000 in total assets shall be specifically reviewed and approved by the bank's board of directors or board of trustees, provided, however, that, when an insider transaction is part of a series of related business transactions involving the same insider, approval of each separate transaction is not required so long as the bank's board of directors or board of trustees has reviewed and approved the entire series of related transactions and the terms and conditions under which such transactions may take place.: The minutes of the meeting at which approval is given shall indicate the nature of the transaction or transactions, the parties to the transaction or transactions, that such review was undertaken and approval given, and the names of individual directors or trustees who voted to approve or disapprove the transaction or transactions. In the case of negative votes, a brief statement of each dissenting director's or trustee's reason for voting to disapprove the proposed insider transaction or transactions shall be included in the minutes if its inclusion is requested by the dissenting director or trustee. (c) Aggregation of Loans or Other Extensions of Credit Which Arc Insider Transactions. Any loan or extension of credit involving an insider shall be aggregated with the outstanding balances of all other loans or extensions of credit involving that insider. For purposes of this regulation, a loan or extension of credit involves a specific insider when the loan or extension of credit is made to that insider, to a person related to that insider, or to any other person where the loan or extension of credit inures to the tangible economic benefit of that insider or a person related to that insider. (d) Information Pertaining to Insider Transactions. Each bank shall maintain a record of insider transactions requiring review and approval under paragraph (b) of this section in a manner and form that will enable examiner personnel to identify such insider transactions. Information pertaining to such insider transactions shall be readily accessible to examiners and shall include all documents and other material relied upon by the board in approving each transaction, including the name of the insider, the insider's position or relationship that causes such person to be considered an insider, the date on which the transaction was approved by the board, the type of insider transaction and the relevant terms of the transaction, any other pertinent facts which serve to explain or support the basis for the board's decision, and any statements submitted for the minutes or the file by directors or trustees who voted not to approve the transaction setting forth their reasons for such vote. (e) Discovery of Insider Relationship. When a bank becomes aware of the existence of an insider relationship after entering into a transaction for which approval would have been required under paragraph (b) of this section, the bank shall promptly report such transaction in writing to the Regional Director of the Corporation in charge of the Region in which the bank is headquartered. (f) Knowledge of Proposed Insider Transaction. of an insider transaction between the bank and: Any insider, having knowledge (3) Any other person where the transaction inures to the tangible economic 2 Although not specifically required by the proposed regulation, prior review and approval is desirable and should occur except under circumstances in which such review and approval is clearly impractical. Where prior review and approval by the board of directors or board of trustees is clearly impractical, subsequent action should occur as soon as possible. Federal Deposit Insurance Corporation FDIC Rules and Regs, § 337.3 |