State v. Deutsch

[296] The opinion of the court was delivered by Swayze, J. In order to convict the defendant under the indictment it was necessary for the state to prove that he was the bailee or agent of Kmonezky, and that he fraudulently took or converted Kmonezky's money to his own use. Under the facts of the case, as far as appeared at the trial, the defendant could not be found guilty upon the ground that he was the agent of Kmonezky nor upon the ground that he fraudulently took the money. If convicted at all, it could only be upon the jury finding that he was the bailee of Kmon-ezky and fraudulently converted the money. Whether he was the bailee or not depended upon the contract between them at the time of the deposits. In determining this question it was important to the defence to prove that Deutsch received the money as a banker, for if he did the relation between him and Kmonezky was that of debtor and creditor and not that of bailee and bailor. As Mr. Justice Miller said in Marine Bank v. Fulton Bank, 2 Wall. 252: “All deposits made with bankers may be divided into two classes, namely, those in which the bank becomes bailee of the depositor, the title to the thing deposited remaining with the latter; and that other kind of deposit of money peculiar to banking business, in which the depositor, for his own convenience, parts with the title to his money, and loans it to the banker; and the latter, in consideration of the loan of the money and the right to use it for his own profit, agrees to refund the same amount or any part thereof on demand.” The same view was expressed by the Court of Appeals of New York in Craige v. Hadley, 99 N. Y. 131, and by Vice Chancellor Pitney in Perth Amboy Gas Light Co. v. Middlesex County Bank, 15 Dick. Ch. Rep. 84. The rule is so well settled that it is unnecessary to cite further authorities. The trial judge recognized the rule but thought it was not applicable to the present case, because the defendant was not legally authorized to transact a banking business. This view was erroneous. The very act which makes it a misdemeanor to carry on the business of banking without authority contemplates that the business may be so carried on, and [297] if the view taken by the trial judge were right it would be impossible to secure a conviction for transacting the banking business without authority, for the defendant would have a complete answer if he could say that he was not conducting the banking business because he was not authorized to do so. The question whether he was conducting the banking business was a question of fact; he might do it either legally or illegally, and the trial judge erred in taking this question from the jury. The distinction between a bailee of” money and a banker is that the bailee is bound to keep the money as it is and return the identical money, or at least to retain the amount and have it always ready, while a banker is entitled to use the money as his own and to loan it out, holding himself ready to make it good when called for. It was not only incumbent upon the state to prove that Deutsch was a bailee of the money but to prove that he converted it to his own use. If the contract was a contract with him as a banker, he had the right to mingle the moneys as he did with the moneys of other depositors, and there could be no conversion at least until there had been a demand upon him and a refusal to pay. Fitzgerald v. State, 21 Vroom 475. There is nothing in State v. Reynolds, 36 Vroom 424, to the contrary. That case recognizes the necessity of proving a fraudulent conversion, and holds that there are other ways of proving it than by demand and refusal. One of the ways suggested is where it appears by the evidence that the embezzler has fled after the alleged embezzlement, and that his acts and conduct were of such a character in connection with his flight as to indicate that his intent was to fraudulently take or convert the funds which he retained. In the present case the acts and conduct of Deutsch, so far as the conversion of Kmon-ezkv’s money is concerned, were that he left sufficient money-in this country to meet Kmonezkv’s claim, and his subsequent refusal to pay was clue, not to a conversion of the money by him, but to the fact that it had, after his departure, been seized by other creditors. This was a risk which Kmonezkv ran, if, by his contract, he permitted his funds to be mingled with those of other creditors. [298] In order to sustain a conviction it was necessary to prove not only that Deutsch was a bailee of Kmonezky and that he converted Kmonezky’s money to his own use, but that he did it fraudulently. Proof of a criminal intent was essential. State v. Temple, 34 Vroom 375. The whole case, therefore, of the state depended upon the nature of the agreement between Kmonezky and Deutsch, and this question was taken from the jury by that portion of the charge of the trial judge to which reference has already been made. The quotations from the charge, and especially the reply to the significant question put by the jury upon their return into court, and the admission of the testimony that Deutsch had embezzled the money of the people, make it quite clear that the trial judge permitted a conviction of the defendant for a general shortage in his accounts with his customers, and not for the particular offence of fraudulent conversion of Kmonezky’s money, which was charged in the indictment. There was no reason in this case justifying the admission of evidence as to other crimes—the embezzlement of the money of other people. Our statute follows the language of the English act. 24 and 25 Vict., ch. 96, § 3; 2 Russ. Cr. (9th Am. ed.) 247. The cases cited by Mr. Russell on pages 247, 248 and 249 amply sustain the view which we have expressed. R. v. Hoare, 1 F. & F. 647; R. v. Garrett, 8 Cox C. C. 368; R. v. Hassall, L. & C. 58; reported also in 30 L. J., C. L. 175, and in 8 Cox C. C. 491; R. v. Hunt, Id. 495. The judgment must be reversed and the record remitted for a new trial. We have not found it necessary to pass upon the alleged error of the court in refusing to allow the defendant to interpose a plea that the offence alleged in the indictment was not the one for which the extradition of the defendant could have been secured. We think that the judge was right in refusing at the time and under the circumstances to allow this plea to be interposed, but as the case must be tried again, and this question may again arise, it may be well to call attention to the fact that the treaty with the Netherlands permits a man to be tried, after his surrender, for another crime, if it [299] be one of those enumerated in the treaty. Larceny is one of the enumerated crimes. The indictment in this case contained five several counts for larceny, corresponding to the five counts for embezzlement. A man may be found guilty of larceny who obtains property fraudulently, even though the intent of the parties is to pass the title, for, upon ordinary principles of law, the fraud prevents the title from passing. 2 Russ. Cr. 214. It would seem from the judge’s charge and the stenographer’s notes that a nolle pros, was entered as to these counts, but the formal record returned with the writ of error does not show it, and we must, therefore, assume that the counts for larceny still remain.