Ambrose v. United States

45 App. D.C. 112, 1916 U.S. App. LEXIS 2660

• Court: Court of Appeals for the D.C. Circuit
• Decided: April 17, 1916
• Docket: No. 2901
• Status: Published

Opinion

Mr. Justice Robb

delivered the opinion of the Court:

Embezzlement is a creature of the statute, not being an offense at common law. Generally speaking, it may be defined as the fraudulent conversion of another’s personal property by one to whom it has been intrusted, with the intention of depriving the owner thereof. Masters v. United States, 42 App. D. C. 350, Ann. Cas. 1916A, 1243; Fulton v. United States, ante, 27; Moore v. United States, 160 U. S. 268, 40 L. ed. 422, 16 Sup. Ct. Rep. 294, 10 Am. Crim. Rep. 283; Grin v. Shine, 187 U. S. 189, 47 L. ed. 135, 23 Sup. Ct. Rep. 98, 12 Am. Crim. Rep. 366. In 9 R. C. L. at páge 1265, it is said: “It must be borne, in mind, however, that the safest guide in determining what constitutes the crime of embezzlement, and what persons are amenable to the charge, is the statutes of the particular state in which the crime is prosecuted.” Under the common-law definition it was found that many wrongdoers escaped; first, because it was necessary that the stolen goods should have been at some time in the complaining party’s possession; and, second, because if the possession of the goods was lawfully acquired, no subsequent conversion during the bailment constituted larceny. It was to meet these defects that embezzlement statutes were enacted. It is at once apparent that the principal difference between larceny and embezzlement lies in the manner in which possession of the property is acquired. In larceny there is a trespass, accompanied by an intent to steal, while in embezzlement there is a fraudulent conversion of property the possession of which was lawfully acquired. Moore v. United States, 160 U. S. 268, 40 L. ed. 422, 16 Sup. Ct. Rep. 294, 10 Am. Crim. Rep. 283. In either case, however, except under special statutes, evil intent must be shown. In many jurisdictions it is provided that a public officer who knowingly and unlawfully appropriates funds in his keeping to his own use is guilty of embezzlement, the purpose of such statutes being to prevent such public officials from using money coming to them in their official capacity for any purpose other than that for which it came to them. Such a statute was the 3d section of the act of June 14, 1866, “to regulate and secure the safe-keeping of public money.” 14 Stat. at L. 65, chap. 122, Comp'. Stat. 1913, § 10264; United States v. Hartwell, 6 Wall. 385, 18 L. ed. 830. A similar statute was under review in People v. Warren, 122 Mich. 504, 80 Am. St. Rep. 582, 81 N. W. 360. See also State v. Ross, 55 Or. 450, 42 L.R.A.(N.S.) 601, 104 Pac. 596, 106 Pac. 1022.

The statute involved in the present case is of a different character from those to which reference has just been made. It is section 841 of the Code [31 Stat. at L. 1326, chap. 854], relating to “Executors and Other Fiduciaries,” including guardians, and provides that if any such fiduciary “shall fraudulently convert or appropriate” property in his possession to his own use, he shall, in addition to forfeiting all claims to commissions, costs, and charges thereon, be deemed guilty of embezzlement. Section 834, relating to “Embezzlement By Agent, Attorney, Clerk, or Servant,” denounces a wrongful conversion; and we have recently held that evil intent is an essential element of this crime. Masters v. United States, 42 App. D. C. 850, Ann. Cas. 1916A, 1243; Fulton v. United States, ante, 27. There is even greater reason for ruling that evil intent, that is intent to defraud, is an essential element of the crime denounced by section 841 than for so interpreting section 834, for the duties and powers of an executor or guardian are broader with respect to the management or control of funds coming into his hands than are generally exercised by an agent, attorney, or clerk. A guardian has complete’ charge of the property of his ward that comes into his possession, and must keep it properly and safely invested. While, of course, it is the better way for the guardian to keep money of -his ward entirely separate from his own, the mere fact that he does not do so affords no sufficient basis for a presumption of evil intent. He is required to give a bond for. the faithful discharge of his duties, and if he carelessly deposits funds of his ward in his own name or mingles such funds in a deposit of his own, and any loss results, he and his bondsman are responsible therefor. Mades v. Miller, 2 App. D. C. 455; Jenkins v. Walter, 8 Gill & J. 218, 29 Am. Dec. 539; Otto v. Van Riper, 164 N. Y. 536, 79 Am. St. Rep. 673, 58 N. E. 643; Mulholland’s Estate, 175 Pa. 411, 34 Atl. 735; O’Connor v. Decker, 95 Wis. 202, 70 N. W. 286. In the case last cited, it was ruled that to entitle a guardian to protection from the loss of funds of his ward by the failure of a bank in which he deposited-them, the deposit must clearly show that it was made by him as such guardian, and the letters “Guar” after his name, in the certificate of deposit, are insufficient.

We now will briefly review such cases as we.think bear upon the questions here involved.

People v. Page, 116 Cal. 386, 48 Pac. 326, was the prosecution of a guardian for embezzlement under a statute similar to ours. The proof showed that, at the time of defendant’s appointment, the ward’s property consisted of a bank deposit of $3,561-.01; that later an order was made by the court having jurisdiction, requiring the filing of an account, which order was not complied with -until more than three years, when the account showed a small disbursement for the ward. It further was shown that the guardian had drawn “out of the bank from time to time all but $51;” that later the proper court made an order requiring the defendant to pay a substantial portion of the ward’s money for his maintenance, which was not done, whereupon an attachment was issued and returned, “Not served.” Subsequently another order was made, requiring the defendant to appear and show cause why he should not file his account, but the citation on this order was returned, “Not served.” A similar citation was issued later, the return showing that the “guardian could not be found.” Citation by publication then was resorted to, whereupon the defendant appeared, and, after securing various continuances, permitted the matter to go by default. The defendant then was indicted, arrested in New York, where he had gone, taken back to California, and there tried and convicted. The court, in commenting upon the fact that the defendant had withdrawn from the bank most of the money which was on deposit there to the credit of the ward, said: “But this was not a criminal act, and did not show a criminal intent to misappropriate the money. lie may have intended to deposit the money in some other bank, or to invest it in safe securities. * * * So far as appears, the defendant at the time of the trial may have still had all the money ready to be paid over on demand to any one authorized to receive it.” The court ruled that the evidence did not justify the verdict, and therefore reversed the judgment.

In State v. Disbrow, 130 Iowa, 19, 106 N. W. 263, 8 Ann. Cas. 190, a guardian was convicted of embezzling funds belonging to his ward, under a statute to the same effect as that here involved. It appeared that he had been removed as guardian and a successor appointed, to whom he was ordered to account and make settlement with; that he had failed to comply with this order and had neither paid nor accounted for the money in his hands. The court said: “But not every wrongful conversion, even by a bailee or trustee without legal authority to sell is an embezzlement. To constitute that crime the conversion must be actuated by the fraudulent purpose to deprive the owner of his property. Bor instance, if this guardian, having collected $300 on a note held for his ward, and, having at the same time a like sum to Ms own credit in the bank, shouM without any fraudulent purpose use the trust money in his hands for private purposes, and then go at once to the bank and have the same amount transferred from his personal to his trust account, he would perhaps he chargeable with a technical conversion, but would not be guilty of embezzlement. * * * The section relied upon makes the criminal character of the act to depend not upon the failure to account, but upon the existence of a fraudulent intent on the part of the accused to deprive the beneficiary of his property.”

The case of Myers v. State, 4 Ohio C. C. 570, 2 Ohio C. D. 712, is much in point, since it was a prosecution of a guardian for embezzlement under a statute like ours. There, as here, the evidence showed a use of the ward’s money by the guardian. The court said: “The principal legal question involved was whether a guardian having, as such, the legal custody and possession of money received by him for his ward, and having in good faith and with honest intentions, and expecting and intending to fully account for and return the same to his ward with proper interest, used it in his own business or in that of a partnership of which he is a member, and it was lost by the failure of his business or that of his firm, without any fraud on his part, is guilty of the crime of embezzlement under section 6842, Rev. Stats.” After pointing out that, under the statute, the crime by an officer charged with the safe-keeping and disbursement of public money, a conversion of such money to his own use completes the offense regardless of the motive actuating such conversion, the court said: “But under section 6842 it is entirely different, and the offense is committed only when the person having in possession property which came to him by virtue of his employment or position fraudulently converts it to his own use, intending to deprive the real owner of it.”

State v. McDonald, 133 N. C. 680, 45 S. E. 582, was the prosecution of an agent of a fraternal society for the embezzlement of its funds. The defendant requested the trial court to charge the jury that intent is an essential element of embezzlement, and must be shown beyond a reasonable doubt. As the evidence tended to show that the defendant had collected assessments, deposited them in bank to his individual credit, and had drawn out a substantial sum for his personal use, the court instructed the jury “that there was an appropriation of the money of the defendant to his own use, and that the law raised the presumption, as a matter of fact, that it was done with a fraudulent intent, and put the burden upon the defendant to rebut that presumption.” The supreme court ruled that the trial court erred in not giving the instruction prayed and in giving the above charge to the jury. After defining embezzlement and calling attention to the statute of that State, which is substantially like ours, the court said: “We think, therefore, that the conversion of funds by a person who has been intrusted with them becomes criminal as an embezzlement only by reason of this corrupt intent, and it is as necessary for the State to establish the intent as a fact independent of the conversion as it is to prove the bad intent in a prosecution for larceny as a fact apart from the taking. The intent to defraud is no more implied in a case of embezzlement than the felonious intent is from the act of taking in a ease of larceny. * * * It follows, therefore, from what we have said, that if the mere act of taking will not raise the presumption of a felonious intent in a prosecution for larceny, there can be no valid reason why the act of conversion should do so in the trial of an indictment for embezzlement.” Later on in the opinion the court said: “The law does not punish the conversion of money, but the fraudulent conversion.”

State v. Moyer, 58 W. Va. 146, 52 S. E. 30, 6 Ann. Cas. 344, was the prosecution of an insurance agent for the embezzlement of funds of the company. The statute, after declaring fraudulent conversion to constitute embezzlement, provided that in a prosecution therefor refusal or failure of the fiduciary to account within thirty days after proper demand would create a presumption of guilt. The court said: “It is the fraudulent intent that constitutes the offense, — the intention to make an absolute appropriation, as contradistinguished from a temporary use without any design to defraud the owner or deprive him of his- property. If the legislature intended to make the mere use of money or other property mentioned an offense, it should not have used the language in the act, which says, to 'embezzle dr fraudulently convert to his own use.’ ”

In State v. Reynolds, 65 N. J. L. 424, 47 Atl. 644, it was ruled that in all cases "which are of an uncertain, or general, or special agency, where the time for the return of the funds collected is indefinite, or not fixed, or which is at the pleasure of the agent or servant, there a demand or other evidence of’ a fraudulent intent to convert may be necessary to put the defendant in a position of having fraudulently converted the money to his own- use. It should be said, however, that a demand and refusal does not of itself in any case establish conversion, or conversion by a defendant to his own use, but that it is only evidence to go to the jury upon the question of the defendant’s fraudulent conversion.”

A pertinent suggestion was made by the court in State v. Strasser, 83 N. J. L. 691, 85 Atl. 227, a prosecution of an attorney for embezzlement, as follows: “The defendant was not being tried for unprofessional conduct, or even for a breach of a civil contract, but for the criminal conversion of another’s money.” See also Fitzgerald v. State, 50 N. J. L. 475, 14 Atl. 746; 9 R. C. L. 1262, 1277; 15 Cyc. 491.

In the light of the foregoing, let us now consider the facts of the present cáse. The government contented itself with merely showing, in the one instance, the receipt of funds of the ward by the defendant, and, in the other, the receipt of funds, the mingling of those funds by the defendant with his own, the evidence tending to show conversion thereof. Had the defendant rested at this point and moved for an instructed verdict, it would have been the duty of the court to have granted the motion. No statute or rule of court was shown to have been violated. It was perfectly proper for the defendant to collect the overdue note, and it can hardly be contended that there was any culpability in the same of the Eichards’s notes, because that sale was expressly authorized by the probate court. There was no evidence whatever upon which the jury legitimately could have based a finding that there had been a fraudulent conversion of those funds. As the court remarked in the Page Case, 116 Cal. 386, 48 Pac. 326, the defendant all along may have had the funds on deposit in another bank or in his safe, ready to respond to any proper demand upon him as guardian. In the absence of proof to the contrary, the presumption would be that he did. In other words, the presumption of innocence is not overthrown by mere rumor or suspicion.

The question naturally arises, how is intent to be proved or disproved. Manifestly, it must be proved by the circumstances surrounding a given case, and disproved by evidence tending to explain those circumstances. It is competent for the government to prove the financial condition of the accused at or immediately prior to the alleged offense. State v. Moyer, supra; Govatos v. State, 116 Ga. 592, 42 S. E. 708. This upon the theory that a man is presumed to know the natural and probable consequences of his acts. Hence if a guardian, without adequate available means to meet all his obligations as guardian, should mingle guardianship funds with his own and thereafter deplete the common fund, a jury would not be likely to attach much credence to liis denial of an intent to defraud his ward. In other words, if the guardian’s financial condition is such that it fairly may be said that any misappropriation of his ward’s funds will be likely to result in loss to the ward, then that fact will have an important bearing upon the question of intent, as well as upon the related question of motive. Failure to account for or turn over funds in the hands of the defendant is a circumstance, as we have seen, which may bo considered along with the other evidence. State v. Reynolds, supra.

While there is some authority for the proposition that evidence of other similar offenses is admissible (Jackson v. State, 76 Ga. 551), the decided weight of authority is to the effect that there must be some possible connection between the acts shown and the one on account of which the defendant is being tried. Thus, in Gassenheimer v. United States, 26 App. D. C. 432, 443, it was ruled that in a prosecution for knowingly receiving embezzled goods it was competent to show the receipt, at about the same time with knowledge that it had been stolen or embezzled, of property of the same kind. In such a case the defendant would be tried for one of a series of offenses constituting a course of conduct or a general scheme. So, too, in State v. Craddick, 61 Wash. 425, 112 Pac. 491, it was held that in a prosecution for embezzling funds of an employer, evidence of other acts of the defendant in giving receipts to patrons of his employer and making entries on the books for less amounts than the money received, “was admissible for the purpose of showing a general scheme which he adopted in keeping his employer’s accounts, as tending to show a system employed on his .part in furthering such embezzlement.

In State v. Disbrow, 130 Iowa, 19, 106 N. W. 263, 8 Ann. Cas. 190, it was expressly ruled that on a prosecution of a guardian for embezzlement, evidence of his appointment as guardian of other persons and his failure to account to them was inadmissible on the question of fraudulent intent. While the ruling was placed upon the ground that such failure to account neither proves nor implies embezzlement, the court was careful to say that it neither affirmed nor denied the soundness of the rule applied by the trial court.

As stated in 9'K. O. L. 1295, “generally, guilt can be established only by reasonable inferences drawn from the general course of conduct of the accused with respect to the subject-matter of his trust, and from all the facts and circumstances surrounding his act which tend to throw light upon or illustrate their nature.” In Reeves v. State, 95 Ala. 31, 11 So. 158, the rule is well stated as follows: “A single act charged in an indictment, standing alone, might be susceptible of inferences of honesty of purpose, or of mere mistake; which, when viewed in the light of a long course of conduct, and of repeated acts of a similar nature intimately and directly connected with the particular accusation, would be utterly inconsistent with such inferences, and the fraudulent intent, with which the particular act was done, demonstrated beyond all reasonable doubt.” Unless the evidence is to be thus restricted to acts “connected with the particular accusation,” it is apparent that the defendant may be charged with one offense and tried for half a dozen. If proof of the embezzlement by a guardian of the funds of ward “A” tends to show him guilty of a similar and later embezzlement of the funds of ward “B,” the two transactions being entirely separate and distinct, then, logically, proof that a defendant on trial for larceny of the property of “A” at another time stole property of “B” would be admissible. The adoption of such a rule would be fraught with serious danger.

In the present case the court rejected all evidence as to payments from the defendant to his wards, and as to the account subsequently filed and approved by the probate court. This was upon the theory, first, that it had not been shown that those payments “came from the particular money deposited in the particular institution” to the credit of the wards; and, second, as to the account, that it had not been filed until after the depletion of the defendant’s bank account, to which reference has been made. In our view, the evidence clearly was admissible. Evidence that the defendant met all his guardianship obligations promptly and in due course tended to throw light upon the question of intent. So all the authorities hold. Even in a case where the mere conversion of public funds by a public officer constitutes the offense, it has been held that the return of the property is a circumstance which should go to the jury for what it may be worth, as reflecting the motive of the trustee at the time of the appropriation, that is, as tending to disprove the allegation that the defendant was guilty of an appropriation. Baxter v. State, 91 Ohio St. 161, 110 N. E. 456. It would be a very unjust rule, indeed, that would permit the government to show failure on the part of the fiduciary to account for and pay over the funds in his hands, as tending to show fraudulent conversion, and preclude the defendant, where there was no evidence of such failure, affirmatively to prove both an accounting and payment, or offer of payment. The suggestion of the government, which seems to have been entertained by the learned trial justice, that when the accoimt was filed with the probate court the crime of embezzlement already had been committed, does not take into account the very important consideration that the jury weighing all the evidence, including this account, might conclude there never had been a fraudulent conversion by the defendant of the guardianship funds coming into his hands. It is not for us to assume the defendant’s guilt, for that question is for the jury to determine in the light of all the circumstances surrounding the transaction.

The defendant was interrogated concerning estates which had been closed in 1910, or long prior' to his appointment in the present case. From what we' have said it is apparent that the answer to this inquiry could throw no light upon the issue involved, and the defendant’s objection should have been sustained.

It is xinnecessary further to discuss the assignments of error, since they are covered by our general discussion of the case.

The judgment must be reversed and a new trial awarded.

Reversed.

Mr. Chief Justice Shepard concurred in the judgment.