The offense of willfully misapplying by the President of the
funds of a national bank, in violation of section 5209 of the
Revised Statutes, is not sufficiently set forth by an indictment
alleging that the defendant, as the president of a national bank,
willfully misapplied a certain sum of the moneys, funds, and
credits of the bank in the manner following, to-wit, that the
defendant, without the knowledge or consent of the bank or of its
board of directors, and knowing himself and another person named to
be insolvent and worthless, procured of the latter divers
promissory notes, some of them endorsed by the defendant, but all
without other security, "with which said notes, by and through the
device and pretense of discounting the same, and making loans
thereon, and with the proceeds of said loans so made thereon and
thereby obtained by him," knowing those notes "to be inadequate
security for the moneys so obtained," he took up and satisfied his
indebtedness to the bank; that "thereafter in turn, by substituting
the notes of" the defendant, sometimes endorsed by the other
person, and sometimes by some third person named, the defendant,
knowing these notes to be inadequate security for the sums they
represented, and they having with them no other security, took up
and cancelled and pretended to pay to the bank the indebtedness
created to it by him as aforesaid, and that the defendant
"did from time to time, by the fraudulent device and means
aforesaid as well as by passing differences between the face of
said various notes and the indebtedness aforesaid, which they were
from time to time to satisfy, to the credit of"
the defendant to the bank, upon the accounts of the bank,
gradually increase the amount of his actual indebtedness to the
bank, "all of which said sums were misapplied willfully and in the
manner aforesaid out of the moneys, funds and credits of" the bank,
and were converted to the defendant's use, benefit, and advantage,
with the intention to injure and defraud the bank and its
depositors and other persons doing business with it.
The defendant, Harry F. Batchelor, was indicted on section 5209
of the Revised Statutes for willfully misapplying the moneys,
funds, and credits of a national bank of which he was the president
and a director and agent, and was found guilty by the jury upon the
second count, which was as follows:
"And the grand jurors aforesaid, upon their oaths and
Page 156 U. S. 427
affirmations aforesaid, do further find and present that the
said Harry F. Batchelor, on the first day of January, 1891, and at
divers times and dates between January 1, 1891, and July 8, 1893,
was then and there the president and a director and agent of a
certain national banking association, to-wit, the Stock Growers'
National Bank of Miles City, theretofore duly organized and
established and then existing and doing business in the City of
Miles City, in the circuit and district aforesaid, under the laws
of the United States of America, did then and there at the time
aforesaid, within the said district, as such president, director,
and agent, by virtue of such employment and while so employed,
willfully misapply forty thousand four hundred and twenty-two
dollars and seventy-nine cents of the moneys, funds, and credits
then and there belonging to and the property of said association,
in the manner following, to-wit, that the said Harry F. Batchelor,
without the knowledge or consent of the said association or the
board of directors thereof, he then and there and at all times well
knowing both himself and the said John W. Batchelor, hereinafter
named, to be insolvent and worthless, did then and there procure of
the said John W. Batchelor divers promissory notes payable to said
association, some of which were endorsed by him, the said Harry F.
Batchelor, but all without other or further security, with which
said notes, by and through the device and pretense of discounting
the same and making loans thereon and with the proceeds of said
loans so made thereon and thereby obtained by him, the said Harry
F. Batchelor, he then and there knowing the said promissory notes
to be inadequate security for the moneys so obtained, he did from
time to time, during the period aforesaid, take up and satisfy the
individual indebtedness of him, the said Harry F. Batchelor, to the
said association, and thereafter in turn, by substituting the notes
of him, the said Harry F. Batchelor, to said association, sometimes
endorsed by John W. Batchelor or by one William Harmon or by one
George Newman or by one C. L. Merrill, he, the said Harry F.
Batchelor, then and there well knowing the said notes to be
inadequate security for the sums they represented, and the said
notes never having with them
Page 156 U. S. 428
any other security, he did then and there take up and cancel and
pretend to pay to the said association the indebtedness so created
to said association by John W. Batchelor as aforesaid, and did from
time to time, by the fraudulent device and means aforesaid, as well
as by passing differences between the face of said various notes
and the indebtedness aforesaid, which they were from time to time
to satisfy, to the credit of him, the said Harry F. Batchelor, upon
the accounts of said association, gradually increase the amount of
the actual indebtedness of him, the said Harry F. Batchelor, to the
said association, all of which said sums were misapplied willfully
and in the manner aforesaid, out of the moneys, funds, and credits
of said association, and converted then and there to the use,
benefit, and advantage of said Harry F. Batchelor, with the
intention then and there had and having in him, the said Harry F.
Batchelor, to injure and defraud the said association, its
depositors, and other persons, corporations, and firms, then doing
or who might thereafter do business with the said association,
contrary to the form of the statute in such case made and provided
and against the peace and dignity of the United States of
America."
The defendant moved in arrest of judgment because this count did
not "state a public offense against the laws of the United States."
The court overruled the motion, and the defendant alleged
exceptions, and sued out this writ of error.
MR. JUSTICE GRAY, after stating the case, delivered the opinion
of the Court.
By the statute on which the defendant was indicted and
convicted,
"every president, director, cashier, teller, clerk, or agent of
any [national banking] association, who embezzles,
Page 156 U. S. 429
abstracts, or willfully misapplies any of the moneys, funds or
credits of the association . . . shall be deemed guilty of a
misdemeanor, and shall be imprisoned not less than five years nor
more than ten."
Rev.Stat. § 5209.
By the settled rules of criminal pleadings and by the previous
decisions of this Court, the words "willfully misapplies," having
no settled technical meaning (such as the word "embezzle" has in
the statutes or the words "steal, take, and carry away" have at
common law), do not of themselves fully and clearly set forth every
element necessary to constitute the offense intended to be
punished; but they must be supplemented by further averments
showing how the misapplication was made and that it was an unlawful
one. Without such averments, there is no sufficient description of
the exact offense with which the defendant is charged, so as to
enable him to defend himself against it or to plead an acquittal or
conviction in bar of a future prosecution for the same cause.
United States v. Britton, 107 U.
S. 655,
107 U. S. 661,
107 U. S. 669;
United States v. Northway, 120 U.
S. 327,
120 U. S.
332-334;
Evans v. United States, 153 U.
S. 584,
153 U. S.
587-588.
The general allegation at the beginning of the count in question
that the defendant, on January 1, 1891, and at divers times between
that date and July 8, 1893, being president, director, and agent of
a certain national banking association, did, as such president,
director, and agent,
"willfully misapply forty thousand four hundred and twenty-two
dollars and seventy-nine cents of the moneys, funds, and credits
then and there belonging to and the property of said association in
the manner following"
is rightly admitted to be insufficient unless the acts
afterwards alleged amount to a willful misapplication of funds of
the association within the meaning of the statute.
It is first alleged that the defendant, without the knowledge or
consent of the association, or of its board of directors, and
knowing himself and one John W. Batchelor to be insolvent and
worthless, procured of the latter divers promissory notes payable
to the association, some of them endorsed by the defendant, but all
without other security. So far, it is not
Page 156 U. S. 430
shown in what manner or for what consideration the defendant
procured these notes, or that he paid for them any sum of money
whatever, least of all that he procured them with moneys, funds, or
credits of the association.
The indictment then proceeds:
"With which said notes, by and through the device and pretense
of discounting the same and making loans thereon, and with the
proceeds of said loans so made thereon and thereby obtained by him,
the said Harry F. Batchelor, he then and there knowing the said
promissory notes to be inadequate security for the moneys so
obtained, he did from time to time, during the period aforesaid,
take up and satisfy the individual indebtedness of him, the said
Harry F. Batchelor, to the said association."
Here is no direct or distinct allegation who made the discounts
of or the loans upon the notes. The allegation of "the device and
pretense of discounting the same and making loans thereon" must
either mean that the discounts, as well as the loans, were made
upon all the notes -- which would make the allegation inconsistent
with itself, inasmuch as, when a bank discounts a note, the note
becomes its absolute property, but when a bank makes a loan of
money upon a note, it holds the note as security only for the
payment of the loan -- or else it must mean that some of the notes
were discounted, and that loans were made upon the other notes, and
upon that interpretation, does not show what part of the notes was
discounted, and upon what part loans were made. Moreover, it does
not allege that any sums whatever were paid by the association, or
by anyone else, for the discounts. As to the loans, it does allege
that "with the proceeds of said loans so made thereon and thereby
obtained by him," the defendant, knowing those notes to be
inadequate security "for the moneys so obtained," did from time to
time "take up and satisfy the individual indebtedness of" the
defendant to the association, but it does not state either directly
or by reference what indebtedness of the defendant is here
intended. "The proceeds of said loans" is an ambiguous and
uncertain description, signifying what was obtained by the lender
for the loans quite as aptly as the very money lent to the
borrower,
Page 156 U. S. 431
and the further words "and thereby obtained by him" may have as
full force by restricting them to the last antecedent, the "said
loans so made thereon," as by carrying them back to the words "the
proceeds of" said loans. While it is further alleged that the
defendant knew those notes to be inadequate security "for the
moneys so obtained," there is no statement whatever of the amount
of said moneys, nor even, as has been seen, any definite and
certain allegation that any money had been obtained at all. To call
upon the accused, or upon the court, to pick out and put together
from such a confused and ambiguous sentence enough to make out a
sufficient charge of unlawfully misapplying funds of the
association would be inconsistent with the settled rules of
criminal pleading.
The rest of the indictment is yet more defective. The next
allegation is that "thereafter in turn, by substituting the notes
of" the defendant to the association, sometimes endorsed by John W.
Batchelor, or by some third person named, the defendant, knowing
these notes to be inadequate security for the sums they
represented, and they having with them no other security, took up
and cancelled and pretended to pay to the association the
indebtedness created to it by John W. Batchelor as aforesaid. This
amounts only to the substitution of worthless notes for other notes
equally worthless without, so for as the indictment shows, the
payment of any money or other consideration whatever.
The remaining specific allegation is that the defendant
"did from time to time, by the fraudulent device and means
aforesaid, as well as by passing differences between the face of
said various notes and the indebtedness aforesaid, which they were
from time to time to satisfy, to the credit of him, the said Harry
F. Batchelor, upon the accounts of said association, gradually
increase the amount of the actual indebtedness of him, the said
Harry F. Batchelor, to the said association."
As admitted by the learned attorney for the United States in
answer to a question from the court, the clause about "passing
differences" has no legal meaning, and the rest of the allegation
does not show any use of funds of the association.
Page 156 U. S. 432
Such being the nature and effect of the specific allegations in
the indictment as to the manner in which the defendant acted, there
are no sums clearly and sufficiently specified to which can be
referred the concluding averment, "all of which said sums were
misapplied willfully, and in the manner aforesaid, out of the
moneys, funds, and credits of said association," and were converted
to the defendant's use, benefit, and advantage, with the intention
to injure and defraud the association and its depositors and other
persons and corporations doing business with it.
Judgment reversed.
