TITLE XXVIII

NATIONAL BANKS

Chapter One. - Organization and powers. Using word "National" as part of corporate name without authority

R. S., s. 5243.

A State bank does not violate this law by using, as part of its name, the word "international." 22 A. G. Op. 475. Nor is this provision violated by using the word "national" in the corporate name of a building and loan association. Lomb v. Pioneer S. & L. Co., 106 Ala. 591, 671. See 20 A. G. Op. 673.

Chapter Three. Regulation of the banking business. Holding United States notes as collateral R. S., s. 5207.' Falsely certifying checks. 12 July, 1882, s. 13; 22 Stat. 166.

It was held in United States v. Heinze, 161 F. R. 425, that § 5208 of U. S. Rev. Sts. does not create any criminal offense, but that it should be read with § 13 of the Act of 12 July, 1882, and that the two create one offense, viz., the certification of a check when the drawer has not sufficient money to cover it, or before the amount shall have been regularly entered. "The wrongful intent is the essence of the crime. If an officer certifies a check with the intent that the drawer shall obtain so much money out of the bank when he has none there, such officer not only certifies unlawfully, but the specific intent to violate the statute may be imputed. And so evil design may be presumed if the officer purposely keeps himself in ignorance of whether the drawer has money in the bank or not, or is grossly indifferent to his duty in respect to the ascertainment of that fact.” Spurr v. United States, 174 U. S. 728, 735, 43 L. ed. 1150. In Potter v. United States, 155 U. S. 438, 447, 39 L. ed. 214, testimony was offered tending to show an agreement of the officers of the bank to treat the overdraft as a loan, drawing interest, and secured by

collateral, and that such agreement was carried into effect by the deposit of the collateral and the casting up of interest. The Court said, "If the defendant in good faith supposed that this arrangement was the equivalent of a loan by note, and that the indebtedness of Evans & Co. (the drawers of the check) was fully secured by collateral, it seems to us the jury would have a right to be informed of the fact as bearing upon the question whether he had 'willfully' violated the statute." Evidence that the cashier, upon whom the president in certifying a check was alleged to have relied, was to the knowledge of the president engaged in stock speculations, and had used the bank's funds for his own purposes without the knowledge of the directors, was held admissible to show the defendant's intent in certifying the check. Spurr v. United States, 87 F. R. 701. In Union Trust Co. v. Preston Nat. Bank, 136 Mich. 460, it was held that a certified check is valid in the hands of a bona fide holder for value, although the maker had no funds in the bank when it was certified. A violation of this section does not preclude the bank from enforcing collaterals pledged to secure the debt arising on the certification. Thompson v. St. Nicholas Nat. Bank, 146 U. S. 240, 36 L. ed. 956, 113 N. Y. 325. Many points as to indictments are found in United States v. Heinze, 161 F. R. 425. "The word 'certify,' as applied to bank checks and as used in the statutes under consideration, has become a term of art, and the court is bound to take judicial notice of its meaning. When it is alleged that one 'certified' a check, that word implies that certain words have been written or printed upon said check, and that the check passed from the custody of the bank into the hands of some other party, and that thereby the person certifying created an obligation of the bank." United States v. Heinze, supra, p. 427. If an indictment against a national bank officer charges him personally with illegally certifying certain checks, it is necessary, in order to sustain such charge, to prove that the individuals who actually executed the certification indorsement were but the physical instruments of the defendant and acted in accordance with his orders. United States v. Heinze, supra. "An overdraft may be legal, or it

may be criminal, according to the intent of the person committing it, as inferable from the surrounding circumstances shown in proof." Ibid., p. 428. This section does not invalidate an oral acceptance of, or promise to pay a check, there being at the time sufficient funds of the drawer in possession to meet it. First Nat. Bank v. Merchants' Nat. Bank, 7 W. Va. 544.

This provision affirms the validity of the contract of certification, and as it expressly provides what consequences shall follow upon its violation, it clearly implies that no other consequences are so to follow. Thompson v. St. Nicholas Nat. Bank, 146 U. S. 240, 247, 36 L. ed. 956. In an indictment under this section, as amended by § 13 of the Act of 1882, it is not necessary to allege that the bank delivered the check after certifying it. United States v. Potter, 56 F. R. 83, 97, 155 U. S. 438, 39 L. ed. 214. See further, Rankin v. Bush, 102 N. Y. App. Div. 510, 93 Id. 181; McCreery R. Corp. v. Equitable Nat. Bank, 54 N. Y. Misc. Rep. 508, 534; Wright v. Merchants' Bank, 3 Cent. L. J. 351; 17 A. G. Op. 472; Buffalo Ins. Co. v. Third Nat. Bank, 29 N. Y. App. Div. 137, 146.

Embezzlement, etc.

R. S., s. 5209.

United States v. Farrington, 5 F. R. 343; Ex parte Hitz, 111 U. S. 766, 28 L. ed. 592; Ex par e Bain, 121 Id. 1, 30 L. ed. 849; Whittemore v. Amoskeag Nat. Bank, 134 U. S. 527, 33 L. ed. 1002; In re Claasen, 140 Id. 200, 205, 35 L. ed. 409; Claasen v. United States, 142 Id. 140, 35 L. ed. 966; Evans v. United States, 153 Id. 584, 587, 595, 38 L. ed. 830; Hunt v. United States, 166 Id. 424, 41 L. ed. 1063; Wright v. Henkel, 190 U. S. 40, 58, 47 L. ed. 948; United States v. Martin, 4 Cliff. 156; Porter v. United States, 91 F. R. 494; Hanover Nat. Bank v. First Nat. Bank, 109 Id. 421. The president does not violate this provision by procuring the discount of a note insufficiently secured, although he applies the money to his own use; nor is he criminally liable for permitting a depositor who has not paid his indebtedness to the bank to withdraw his deposit. United States v. Britton, 108 U. S. 193, 27 L. ed. 701. If an officer of a national bank permits a firm of which he is a member

to overdraw its account with intent to defraud, he is punishable criminally under this section. United States v. Fish, 24 F. R. 585. "This statute is highly penal, and should therefore receive a strict construction." United States v. Eqe, 49 F. R. 852. The word "moneys" includes all money, and is not confined to money usually denominated "lawful money." United States v. Johnson, 4 Cinc. L. Bul. 361. "The word 'money' refers to the currency or circulating medium of the country; the word 'funds' refers to government, state, county, municipal, or other bonds, and to other forms of obligations and securities in which investments may be made; and the word 'credits' refers to notes and bills payable to the bank, and to other forms of direct promises to pay money to it." United States v. Smith, 152 F. R. 542, 544. This section punishes the embezzlement of the property of national banks, but not of the property of individuals deposited with, and in the custody of, such banks. Commonwealth v. Tenney, 97 Mass. 50. If a bank, through its governing board or its exchange committee, consents to the fraudulent acts of its officer before or at the time they were done, such officer cannot be punished; if they did not so consent, it is no defense that they afterwards learned of the transaction. United States v. Youtsey, 91 F. R. 864; Rieger v. United States, 107 Id. 916. This applies to agents in liquidation appointed by the stockholders. United States v. Jewett, 84 F. R. 142. The misapplication of the bank's assets by its president, who is appointed to close its affairs in liquidation, with authority to collect its credits, is within this section, for he is an "agent" as well as an official trustee for creditors. Jewett v. United States, 100 F. R. 832, 838. It is no defense that the money was subsequently refunded. United States v. Morse, 161 F. R. 429. A conviction under this section does not disqualify a witness in a criminal case. United States v. Sims, 161 F. R. 1008. As to questions of evidence and instructions, see Goll v. United States, 151 F. R. 412; May v. United States, 157 Id. 1; Clement v. United States, 149 Id. 305; Lear v. United States, 147 Id. 349.

"Embezzles." This word appears to mean, whenever used to distinguish a crime which a person has the opportunity to commit

by reason of some office or employment, some breach of confidence or trust, or some misuse of an opportunity. United States v. Conant, 9 Cent. L. J. 129; United States v. Harper, 33 F. R. 471. Embezzlement is a species of larceny, and is applicable to the stealing of property by clerks, agents, servants, and parties acting in fiduciary capacities. In order to constitute this crime it is necessary that the property embezzled should come lawfully into the hands of the party embezzling, and by virtue of the position of trust he occupies. United States v. Lee, 12 F. R. 816.

If the president of a bank, charged as a trustee with the administration of the funds of the bank, converts them to his own use, he embezzles and abstracts them, unless he shows authority for so doing. Re Van Campen, 2 Ben. 419.

In order to constitute embezzlement there must be an actual and lawful possession or custody of the property of another by virtue of some trust, duty, agency, or employment, committed to the party charged; and while so lawfully in the possession and custody of such property, the person must unlawfully and wrongfully convert the same to his own use. It is not necessary that the accused should have been in the exclusive possession or custody at the time of the conversion to his own use. If it appears that the business and assets of the bank were actually or practically intrusted to the care and management of the defendant, so that by virtue of his position as vice-president, director, or agent, he had not merely access to, or a constructive holding of, but such actual custody of the funds, moneys, and credits of the association as enabled him to have and exercise control over the same, that would place him in the lawful possession thereof. If his position and employment gave the defendant a superior or a joint and concurrent possession with subordinate employees or agents of the bank, his possession would be lawful. United States v. Harper, 33 F. R. 471, 475.

"Abstracts." This word as used in this section is not a word of settled technical meaning like "embezzle." It is a word 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,