Opinion
No. 30436.
May 29, 1933. Suggestion of Error Overruled June 12, 1933.
1. BANKS AND BANKING.
In prosecution of banker for receiving money on deposit knowing bank was insolvent, state's evidence that assets consisting of deposit certificates issued under deposit guaranty law were worth much less than face value held improperly excluded, notwithstanding statute authorizing issuance of bonds to pay outstanding certificates, where such bonds had not been sold (Laws 1914, chapter 124, as amended by Laws 1918, chapter 165; Laws 1930, chapter 269).
2. CRIMINAL LAW.
Supreme Court could not reverse judgment acquitting a defendant, though trial court improperly excluded certain evidence offered by state (Code 1930, section 19 (2).
APPEAL from Circuit Court of Attala County.
W.D. Conn, Jr., Assistant Attorney-General, for the state.
It is a matter of common knowledge that the deposits of the banks of the country exceed, by many times, the amount of actual money in the country. This is so because a large part of the business is transacted by checks and drafts. Hence, the solvency or insolvency of banks, must, of necessity, rest upon the value of their securities rather than upon the amount of money on hand.
Evidence is admissible to show the indebtedness due to a bank and its value as a part of the assets, and, "As the condition of the bank depends upon the value of its assets, the receiver appointed, and other qualified persons, may testify as to the value of commercial paper held by the bank."
State v. Shore, 96 Wis. 1, 70 N.W. 312, 65 A.S.R. 17, 37 L.R.A. 142; 3 R.C.L. 493, par. 121; Skarda v. State, 118 Ark. 176, 175 S.W. 1190, Ann. Cas. 1916E 586.
In the very nature of things the value of the assets of a bank determine the solvency or insolvency of it and testimony relating to its value as of the date a deposit was received should be admissible as bearing on the question of whether or not such insolvency was known to the officers of a bank, or, by the exercise of reasonable diligence, should have been known.
Magruder, Walker Magruder, of Starkville, for appellee.
Appellee does not deny that the value of the assets of a bank determine the solvency or insolvency of it and that testimony relating to the value of such assets as of the date a deposit was received should be admissible as bearing on the question of whether or not such solvency was known to the officers of the bank or by the exercise of reasonable diligence should have been known.
However, appellee contends that under the provisions of chapter 269 of the Laws of 1930, which chapter as admitted in brief of appellant had been in force some six or eight months prior to the receipt of the deposits here in question, the fifty thousand dollars State Bank Guaranty Certificates were guaranteed by the state of Mississippi. Under the provisions of section 1 of said chapter 269, "The full faith and credit of the state of Mississippi are hereby irrevocably pledged to the payment of said bonds," such bonds being authorized to secure funds with which to pay the state bank guaranty certificates here in question. To permit the state of Mississippi to prove in a criminal proceeding the market value of its own bonds in an effort to establish the insolvency of the Bank of McCool would be permitting the state to deny its "full faith and credit" which we contend cannot be done in a proceeding of this kind.
The state was not undertaking to establish some depreciation in the value of those guaranty certificates or for all legal purposes and intendments the bonds of the state issued under chapter 269 of the Laws of 1930, but was undertaking to show that such obligations or in legal effect such bonds were absolutely without value.
It was in effect an effort by the state to repudiate its own bonds in a criminal prosecution in order that this defendant might be convicted of a felony because he had the temerity to believe in the honor, faith and credit of this commonwealth.
James T. Crawley and J.G. Smythe, Jr., both of Kosciusko, amici curiae.
This court is familiar with the fact that under the state guaranty bank act that was in force for many years prior to 1930, that any bank doing business in Mississippi under the general banking laws of said state, and any bank subject to the provisions of said act, and after the passage of the same was authorized to do business in the state and was authorized and empowered to participate in the assessments and benefits and to be governed by the regulations of the bank deposits guaranty fund of the state of Mississippi.
Section 3825, Hemingway's Code of 1927; Section 3839, Hemingway's Code of 1927; Section 3828, Hemingway's Code of 1927.
In prosecuting an officer charged with receiving deposits in an insolvent bank knowing or having good reason to believe it to be insolvent, to receive a deposit without informing the depositor of its condition, a defendant cannot be convicted unless he actually knew that the bank was insolvent, and that the defendant was negligent in being uninformed of its condition is insufficient to support a conviction.
Stewart v. State, 95 Miss. 627.
No criticism has been offered of any note carried by said bank. No criticism has been offered of any other bond if any owned by said bank. The district attorney has very fairly and frankly stated that unless he could show that there was no market value or no commercial value for the securities mentioned above, to-wit: the guaranty certificates held by the bank, that he could not prove the bank to be insolvent.
If the district attorney were permitted to offer any evidence with reference to the market or commercial value of the bonds issued by the state of Mississippi which carries the full faith and credit of the state, then we say that this would constitute in effect a collateral attack upon the bonds of the state of Mississippi and upon a promise of the state which is irrevocably pledged to the payment of the same. It is an elementary proposition of law that a collateral attack cannot be made upon the obligations of the state.
The appellee, a banker, was tried on an indictment charging him with receiving money on deposit knowing his bank was insolvent. The jury acquitted him, and there was a judgment accordingly. The appeal is by the state under paragraph (2) of section 19, Code of 1930, which provides that: "The state or any municipal corporation may prosecute an appeal from a judgment of the circuit court in a criminal cause in the following cases: . . . (2) From a judgment actually acquitting the defendant where a question of law has been decided adversely to the state or municipality; but in such case the appeal shall not subject the defendant to further prosecution, nor shall the judgment of acquittal be reversed, but the Supreme Court shall nevertheless decide the question of law presented." The constitutional validity of the statute is not here challenged, and we will not raise the question ourselves, but see United States v. Evans, 213 U.S. 297, 29 S.Ct. 507, 53 L.Ed. 803 .
A part of the assets of the bank alleged to be insolvent consisted of deposit certificates issued by the superintendent of banks under the Bank Deposit Guaranty Law, chapter 124, Laws of 1914, and chapter 165, Laws of 1918, payable out of the bank depositors' guaranty fund, the face value of which together with accrued interest thereon amounted to about fifty thousand dollars. The state offered, but was not permitted by the court below, to prove that these certificates were worth very much less than their face value. It is common knowledge that the bank depositors' guaranty fund has for a number of years been insufficient for the payment of a large part of these guaranty certificates, so much so that by chapter 269, Laws of 1930, the Legislature authorized the issuance of state bonds to an amount sufficient for the payment of all of such certificates then outstanding, and directed that when sold the proceeds thereof should be so applied.
It is said in support of the ruling of the court below that the payment of these certificates was guaranteed by the state both in the bank depositors' guaranty law and chapter 269, Laws of 1930. The bank depositors' guaranty law simply provides for the payment of these certificates out of the deposit guaranty fund raised by a stated contribution thereto made by the banks annually. Chapter 269, Laws of 1930, simply provides for the sale of the state's bonds, the proceeds of which are to be applied to the payment of these certificates. Both of these statutes, of course, affect, but do not necessarily fix, the value of these certificates. There is no contention here that the bonds authorized have been sold, and for aught that we judicially know they may never be. If and when they are sold, and the money is available for the payment of these certificates, it would seem that they would then be worth their face value, but until that is done their value must be proved in the same way as the value of any other promise to pay money is proved. The evidence should have been admitted.
Under the statute governing this appeal we cannot reverse the judgment but simply express our opinion, for whatever it may be worth, on the ruling of the court below.