United States v. Haskins

11 C.M.A. 365, 11 USCMA 365, 29 C.M.R. 181, 1960 CMA LEXIS 313, 1960 WL 4478

Opinions

Opinion of the Court

George W. Latimer, Judge:

I

The accused was found guilty of twenty specifications of larceny, in violation of Article 121, Uniform Code of Military Justice, 10 USC §921. He was sentenced to dishonorable discharge, forfeiture of all pay and allowances, and confinement at hard labor for five years. The convening authority approved only so much of the sentence as provided for dishonorable discharge, forfeiture of all pay and allowances, and confinement at hard labor for three years. The board of review affirmed the findings and sentence, and accused thereafter petitioned this Court for review, which we granted to consider the following two questions:

Whether the evidence of record is legally insufficient to support the findings of guilty of specification 2.

Whether accused was forced to produce evidence, essential to proof of the shortages, in violation of Article 31, Uniform Code of Military Justice.

II

The facts common to both inquiries will be stated first, and those bearing more directly on each issue will be detailed as the question is answered. Generally stated, the facts are these. For some two and one-half years prior to the detection of these offenses, the accused was in charge of the Air Force Aid Society office at a base in Georgia. Except for brief periods of absences, he was the only person working in the office. A part of his duties consisted of processing applications for loans, maintaining the records of the Society, receiving payments on the loans and issuing receipts therefor, making appropriate entries on the loan cards pertaining to the individual accounts, and making deposits in the Society’s bank account of the funds received by him.

In the alleged misappropriations of funds, the accused employed two methods which are relevant to our questions. Each applicant had to make written application for the amount of the loan desired. On some occasions, the borrowers received checks in amounts in excess of those requested. When that occurred the individual borrower was told by accused that the check was in error as to the amount but to cash the check and return the amount of the overpayment to him. The respective borrowers carried out these instructions, but thereafter the loan application was changed by the accused to show that the borrower had received the amount shown on the face of the check. No credit was given for the amount returned and the money was not deposited to the credit of the Society.

The second pertinent method employed by the accused in his alleged peculations was to pocket funds received as payment on the various loans without crediting the account of the individual concerned with the payment. With one exception, the accused was either identified as the person to whom the payment was made or the receipt given at the time of payment was in his handwriting.

On or about September 16, 1958, the accused was relieved of his duties with the Society for the reason that he was suspected of misappropriating certain funds belonging to the base theater where he worked after duty hours. He was placed in confinement pending investigation and was replaced in the Society by another airman. On or about October 2, 1958, the replacement and a lieutenant, who was the officer in charge of the Society Fund, were encountering difficulty in completing a monthly report required by Air Force regulations. The reason for their difficulty was that they were unable to locate some 34 loan ledger cards which reflected the current status of those particular loans, due to the fact that those forms were missing from the filing cabinet where they belonged. The lieutenant decided the accused’s assistance was necessary to locate the records and complete the report, and he therefore had the accused brought to the Society office. - The lieutenant inquired whether the accounts were in proper condition, and the accused replied that they were. Also, he was asked by the lieutenant if he knew where the missing forms could be located, and the accused gave an affirmative reply. The lieutenant then left the room and, when he returned a short time later, the missing ledger cards were handed to him by the accused. Up to that point in the proceedings, the accused had not been advised of his rights in accordance with Article 31, Uniform Code of Military Justice, 10 USC § 831. As a result of the information supplied by the missing ledger cards it was possible to complete the financial report, and it reflected that there were no irregularities. Thereupon, it was duly submitted and published in accordance with Air Force regulations. It was not until later when the lieutenant contacted the borrowers whose accounts appeared to be delinquent and was informed by them that they had made payments for which they had not received credit that suspicion of a shortage in the funds of the Society was aroused.

Ill

The specification involved in the first stated issue alleges that on or about July 15, 1957, the accused stole a sum of $40.00 from the Air Force Aid Society. The evidence in relation thereto would permit the court-martial members to find beyond a reasonable doubt that Airman Williams, the borrower involved, dealt only with the accused in his borrowing transactions with the Society; that Williams first obtained a loan from the Society on June 14, 1957, and it was to be repaid in cash in a lump sum when he received his allotment; that Williams repaid this amount of $40.00 to the accused sometime during the month of July 1957, but his account was not credited therewith; that on or about November 6, 1957, Williams obtained another loan of $40.00 from the Society, and it was to be repaid by a Class “R” allotment at the rate of $10.00 per month; that this amount was taken from Williams’ pay and sent to the Society during the first months of 1958, but credit for the monthly payments was improperly applied by the accused to show payment of Williams’ first loan.

Appellate defense counsel contend that evidence is insufficient to support the findings because the leave record of the accused shows he was in a leave status from July 3, 1957, until July 29, 1957, and that the ledger card of the Society on the first loan shows it to have been repaid in full. Our answer to that argument will not be extensive. The record shows the ledger card was faked by the accused by entering payments thereon which should have been applied on the later loan. The offense was committed at the time the first loan was repaid and accused converted that money, and payments on a subsequent borrowing improperly credited on the books of the Society do not relieve the accused of his prior criminality in misappropriating the earlier payment. Furthermore, accused’s leave record is not conclusive evidence that he was not present on post and thus could not have received the payment. He may have been using up some of his leave without departing from his station, and there is no showing that he was unavailable for payments from July 3 to July 29, 1957. The entry merely shows a leave status which does not dispute the positive testimony by Williams that he repaid the' money to the accused personally and, even if it did raise a conflict in the testimony, the court-martial could believe the borrower as against the record. Even official records can be inaccurate. We, therefore, believe that the rule upon which the accused relies, namely, that circumstantial evidence must exclude every reasonable hypothesis other than that of guilt, if applicable in the case at bar, is well satisfied. Accordingly, this assignment of error is resolved against accused.

IV

The second issue must likewise be determined against the petitioner.. There are two reasons which support this conclusion. First, the accused was-not a suspect within the meaning of Article 31, Uniform Code of Military- Justice, supra. We mention this facet of the controversy because two questions and answers found their way into the record. The lieutenant asked the accused if he knew where the ledger cards were located and whether his accounts were up to date; and in both instances the lieutenant received an affirmative reply. The second reason for holding against the accused is that he had a duty to turn over completed records to his successor, and a warning to the contrary under Article 31 was not required.

As to the first reason mentioned above, we have no disposition to question the statement by the board of review that the lieutenant’s testimony is somewhat self-contradictory. That state of confusion arises naturally when a witness is seeking to explain whether he is suspicious of one who also had custody of separate funds which had been misappropriated. This accused was custodian of theater monies as well as the Society fund and, obviously, when he was suspected of stealing from the former, some doubt might arise in the mind of post authorities as to whether he had taken illegally from the latter. But that is not the sort of suspicion which Congress had in mind when it enacted Article 31, for it provided that the interrogator must inform one suspected of an offense of the nature of the accusation. The suspicion must have crystallized to such an extent that a general accusation of some recognizable crime can be framed. Here it had not and, therefore, it was impossible to apprise the accused of the nature of any charge. See United States v Davis, 8 USCMA 196, 24 CMR 6. No doubt the lieutenant was apprehensive about the state of affairs of the Society, but his actions belie any belief that any offense had been committed at all or that he was accusing the accused of misbehavior, for no questions were asked and no steps taken to audit the books at the time the accused was relieved. Some two weeks thereafter, when a monthly statement required by regulations had to be published, the lieutenant and the accused’s successor could not Complete the report because they were unable to locate all the records. The inquiries made at that time were solely for accounting purposes with no thought of maladministration and, when the records were produced, the entries appeared regular, the accounts were audited, and the report was published. Under those circumstances, we would be required to find the lieutenant grossly negligent if prior thereto he had reason to suspect part of the cash assets had been stolen. Ordinary business behavior in addition to the evidence of record dictates rather conclusively that the accused was not suspected of stealing any funds of the Society until the borrowers cast doubt on the accuracy of the records in regard to their loans. That was some time after the production of the records.

In connection with this branch of the controversy, we emphasize the fact that the lieutenant was not conducting an investigation for the purpose of fixing responsibility for an offense which was known to have been committed. Nor was he a law enforcement agent or an officer detailed to collect evidence to aid in solving a crime. Both he and the accused were required by regulations to prepare and submit a monthly report of their stewardship, and his sole purpose in dealing with the accused after the latter’s relief of duties with the Society was to gather the information necessary to perform that requirement. Some two weeks had elapsed from the time the accused was relieved until he produced the records, no investigation had been ordered, and the inexperienced replacement had reported nothing irregular. There had been no determination that any Society money was missing, and the conversation involved was not only consistent with the duties imposed upon the parties, but it was required by their relationship to the fund. Finally, there is not the slightest suggestion in this record that the lieutenant was seeking to obtain incriminating evidence against the accused or, for that matter, anyone else.

The second facet of this issue requires consideration of the necessity to warn a custodian of corporate funds subject to Government supervision and control before requiring him to produce his book of accounts. If the warning required by Article 31 is to be of any ■value to an accused for that purpose it would necessitate advice to the effect that he need not produce the books, and that if he did, they could be used against him in a court-martial. Aside from being far outside the sweep of Article 31, such a warning would be in conflict with the law. In United States v Aronson, 8 USCMA 525, 25 CMR 29, we were confronted with a question concerning the officiality of an oath but, in the course of that opinion, we announced this principle of law governing books of accounts:

“The interview between the accused and the Office of Special Investigations agent also bore the stamp of officiality from the accused’s point of view. Being entrusted with the fund he was bound to account for it. United States v Valencia, 1 USCMA 415, 4 CMR 7. The obligation to account came into existence at the very inception of his duties. Referring to a similar situation we said in United States v Hopkins, 7 USCMA 519, 522, 22 CMR 309: ‘the accused had a positive duty to account for the Government funds committed to his care, and to submit to audits by military authorities.’ Thus, from the very moment he assumed control over the fund the accused was, in the language of Judge Pickett in the Levin case, supra, page 91, ‘under legal obligation to speak.’ ”

It ought to be considered hornbook law that a custodian of public monies has a duty to account for funds coming in his possession, and to account means to show properly all receipts and expenditures. If that were not so, the body corporate could never have continuity in its accounting system and the very heart of accounting would be stilled upon the departure •of a custodian. It is to be remembered that under law there is no privilege against production such as exists as to private papers. Wilson v United States, 221 US 361, 55 L ed 771, 31 S Ct 538, states the obligations resting upon the custodian of corporate books. In the course of that opinion, the Court made the following comments which are relevant in the case at bar:

“The fundamental ground of decision in this class of cases is that where, by virtue of their character and the rules of law applicable to them, the books and papers are held subject to examination by the demanding authority, the custodian has no privilege to refuse production although their contents tend to crimi-nate him. In assuming their custody he has accepted the incident obligation to permit inspection.

“The appellant held the corporate books subject to the corporate duty. If the corporation were guilty of misconduct, he could not withhold its books to save it; and if he were implicated in the violations of law, he could not withhold the books to protect himself from the effect of their disclosures. The reserved power of visitation would seriously be embarrassed, if not wholly defeated in its effective exercise, if guilty officers could refuse inspection of the records and papers of the corporation. No personal privilege to which they are entitled requires such a conclusion. It would not be a recognition, but an unjustifiable extension, of the personal rights they enjoy. They may decline to utter upon the witness stand a single self-criminating word. They may demand that any accusation against them individually be established without the aid of their oral testmony or the compulsory production by them of their private papers. But the visitatorial power which exists with respect to the corporation of necessity reaches the corporate books, without regard to the conduct of the custodian.”

And in the later case of Davis v United States, 328 US 582, 90 L ed 1453, 66 S Ct 1256, the rule was reaffirmed in the following language:

“The Court proceeded to analyze the English and American authorities and added, 221 U. S. at pages 381, 382, 31 S. Ct. at page 545, 55 L. Ed. 771, Ann. Cas. 1912D, 558:

‘The fundamental ground of decision in this class of cases, is that where, by virtue of their character and the rules of law applicable to them, the books and papers are held subject to examination by the demanding authority, the custodian has no privilege to refuse production although their contents tend to criminate him. In assuming their custody he has accepted the incident obligation to permit inspection.’

The distinction is between property to which the government is entitled to possession and the property to which it is not. See 8 Wigmore, Evidence, 3 ed, § 2259c.”

To escape the effect of the above-cited eases, appellate defense counsel insist they are inapposite because, at the time of the demand, the accused was not in possession of the ledger cards either actually or constructively. With that contention we disagree. All of the books and records were in his possession at the time he was incarcerated for an offense not connected with the fund in question. While a substitute had been ordered to replace him, it is readily inferable from the record that neither he nor the lieutenant in charge could locate the missing ledger sheets. All other records were found in the office of the Society, but the accused was the only person who knew where the missing records were concealed. They had been segregated from the bulk of the Society records in the proper file for forms of the same class, and it was necessary to contact the accused to determine their whereabouts. Significantly, they were not obtained by him until the lieutenant was absent for a moment and, if they were not intentionally secreted, their location was not readily detectable. Therefore, it would indeed be strange law to hold that this accused could escape being compelled to produce corporate books and records because they were hidden by him from a successor-employee. However, for the purpose of this ease, we need go no further than to state that, while they could not be found prior to request, this accused did produce them without coercive measures having to be taken, after he had talked with the lieutenant. There was no compulsion and no threats or orders and, if relative rank was a factor, the accused did no more than he was legally obliged to do whether that ingredient be present or absent, and that, of course, includes necessary explanatory statements which are no more' than auxiliary to production. It is part of the duty of a custodian to hand over to his successor the written records of his administration, and he does not account within the meaning of the law until he furnishes a suitable record of those financial transactions he carried on for the corporation. Records hidden from the corporation do not serve that purpose and, at the very least, a custodian is constructively in possession of them until they are made accessible to other officers or agents of the corporation.

While we have stated the accused was not ordered to produce the ledger cards, we are willing to assume the request was of the same effect. As civilian authorities indicate, books and records of a corporation can be subpoenaed even though they incriminate the custodian, and that is a form of compulsion. In the service, an order to produce records of public funds by one in authority might be considered a form of coercion but, under military law, such an order is legal. We, therefore, conclude that there is no duty to warn a custodian of public funds that he need not produce his records when by law he is required to do so.

For the foregoing reasons, the decision of the board of review is affirmed.

Chief Judge Quinn concurs.