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The People v. Barrett





WRIT OF ERROR to the Criminal Court of Cook County; the Hon. DANIEL A. ROBERTS, Judge, presiding.


Lawrence A. Barrett, plaintiff in error, prosecutes this writ to review a judgment of conviction of embezzlement entered by the criminal court of Cook County after trial before that court without a jury. He was sentenced to the Illinois State Penitentiary for a term of not less than five nor more than eight years. The indictment returned against him consisted of two counts, the first of which charged that he feloniously and fraudulently, without having the consent of unpaid owners and holders of certain liquidating trust certificates, embezzled and fraudulently converted to his own use a sum of money amounting to $10,398.31, which was the money and property of Teresa Romanelli, in the amount of $120.00; Helen McGovern, in the amount of $107.18; Bennett W. Ellis, $49.21; Eleanor Cowdin, $20.69; John Bintz, $6.78, and 2500 other unpaid holders and owners of certain liquidating trust certificates whose names are unknown to the grand jurors. The second count charged larceny of the same property but will need no consideration in this opinion since the trial court made no finding with respect to it.

The charges against defendant arose from his participation as successor trustee in a plan for the reorganization of The Madison-Kedzie Trust and Savings Bank which had suspended banking operations on March 4, 1933. Briefly, under the plan a new bank was created, while the assets of the old bank were to be liquidated and paid to the persons entitled to receive payment. One William L. O'Connell was named as liquidating trustee and, shortly after December 21, 1934, entered into a liquidating trust indenture with the bank, by which the assets to be liquidated were delivered to him. O'Connell died July 24, 1936, and, under the terms of the trust agreement, defendant succeeded him as liquidating trustee.

The trust agreement provided that the trustee be vested with equitable title to certain assets of the bank enumerated in the indenture for the purpose of liquidating, compromising, exchanging and settling them, and ultimately reducing the same to cash, at times and in manners solely within the absolute and uncontrolled discretion of the trustee. It was provided that all cash sums realized by the trustee should be distributed in the following order of priority: (1) To the payment of costs and expenses of the liquidating trustee; (2) Pro rata to the holders of Class A Liquidating Trust Certificates authorized under the provisions of the trust agreement; (3) Pro rata to holders of class B certificates; and (4) Pro rata to holders of class C certificates. The latter two classes of certificate holders were to receive nothing until class A holders had been paid in full. The total face value of outstanding class A certificates was $826,613. It was agreed that the trust certificates were not to constitute an indebtedness of the bank or of the liquidating trustee, but only evidence of the right of the certificate holders to receive payments from the trustee when and if payments were made by him. The trustee was to keep a record of certificates issued, dates, names and addresses of persons to whom issued, the amounts, and records of transfers, cancellations and payments.

Plaintiff in error set about to liquidate the assets he had received as successor trustee, and as he did so placed the money realized in what was known as the trustee's general account in the Merchants National Bank of Chicago. On December 26, 1942, he withdrew $82,658.03 from his general account and with it opened what was called the trustee's dividend account in the same bank. He then declared a 10 per cent dividend for class A certificate holders, sending them notice of the same. June 5, 1944, a second 10 per cent dividend was declared and notice given; however, defendant deposited only $70,000 in the dividend account. A dividend of 15 per cent was declared on January 15, 1946, but only $60,000 was deposited in the dividend account. The three dividends were not put into separate accounts or segregated in any manner but all went into the one dividend account at the Merchants National Bank. The total cash requirement for the three dividends declared aggregated $289,291.44, yet up to and including March 6, 1946, defendant's deposits were only $212,644.96 or $76,646.48 short of the amount required. On March 6, 1946, the dividend account became depleted when an overdraft of $48.63 occurred. On this date there was still a sum of $10,398.31 of the first dividend yet unpaid to 2786 class A certificate holders, including those named in the indictment. It is this sum which defendant is accused of embezzling.

Subsequent to March 8, 1946, and concluding September 29, 1946, the defendant transferred a total of $16,250 from his general account to the dividend account by eleven separate transfer items, some of which were to meet overdrafts; $4600 was deposited from an unexplained source; and $227.74 was transferred by bank authorities after closing out the account because of an overdraft under date of September 30, 1946. The dividend account on that date was short $51,439.74 of the amount necessary to completely pay out the three dividends declared. On January 3, 1947, a receiver of the assets, property and effects of the liquidating trust was appointed by the circuit court of Cook County. At that time there remained only $4.75 in defendant's general account.

The notice of the first 10 per cent dividend which was sent to each of the class A certificate holders was substantially as follows: "A ten per cent (10%) liquidating dividend has been declared on the outstanding Class `A' Liquidating Trust Certificates as of December 28th, 1942. Kindly bring your certificate (which is required for endorsement of payment). Call at office No. 2," etc. The checks made up for the first dividend were blue and white in color and had printed on the margin "Liquidating Dividend No. 1, ten per cent Class A liquidation trust certificate." The checks for the second and third dividends were different colors.

The indictment, which was returned April 21, 1948, charged that plaintiff in error feloniously and fraudulently, without having the consent of the unpaid class A certificate owners, embezzled and fraudulently converted to his own use the sum of $10,398.31 belonging to Teresa Rommelli, Helen McGovern, Bennett W. Ellis, Eleanor Cowdin, John Bintz and 2500 other unpaid holders and owners of class A liquidating certificates. Briefly, the theory of the prosecution is that plaintiff in error wilfully converted the sum to his own use by using it to discharge his obligations to the second and third dividend holders. Plaintiff in error pleaded not guilty, following which a hearing was held before the court. At the conclusion of the evidence defendant presented a written motion for a judgment of not guilty because of alleged duplicity of counts 1 and 2 of the indictment and because of the intervention of the three-year Statute of Limitations. This motion, along with those in arrest of judgment and for a new trial, were overruled by the trial court, which thereupon found him guilty of embezzlement as to count 1, made no finding with respect to count 2, the larceny count, and sentenced him to the penitentiary.

In the errors assigned in this court plaintiff in error reiterates his contentions that count 1 is duplicitous and that the indictment was barred by the three-year Statute of Limitations. In addition he urges that the evidence fails to prove the crime of embezzlement, stating that the evidence does not show a criminal intent, or a conversion to his own use. Finally, it is contended that there was a variance between the allegations of the indictment and the proofs as to ownership of the several beneficiaries of the trust.

With respect to the assertion that count 1 is duplicitous, defendant argues that where one is charged with a number of embezzlements from separate individuals, in separate amounts, such charges cannot be joined in one count of an indictment. Although it is the general rule that it is improper to lay the ownership of property involved in an offense in several different persons in a single count of an indictment, an indictment charging in one count an offense involving the property of several different owners is not rendered duplicitous by reason of the allegation of plurality of owners where it charges the commission of one offense committed at one time and place, constituting one transaction. (27 Am. Jur. p. 685.) Duplicity in an indictment arises from charging more than one offense, not from charging a single offense committed in more than one way, or pleading different acts contributing to the ultimate charged offense. (United States v. B. Goedde & Co. 4 F. Supp. 523.) Where two offenses arise out of a single transaction, a single indictment may contain counts as to each offense, or the offenses may be joined in the same count. (People v. Arnold, 396 Ill. 440.) From the foregoing it may be seen that whether the allegations of the indictment here charge separate embezzlements, or merely a pleading of separate acts which ultimately constitute a charge of one offense, they were properly joined in one count since they arose from one transaction, in the same manner, time and place. As pointed out in People v. Schnepp, 362 Ill. 495, embezzlement may, and often does, consist of many acts done in a series of months or even years. The charge of duplicity is not well founded.

Defendant's next allegation of error is that the proofs show that the indictment is barred by the three-year Statute of Limitations. The accepted principle involved is that the statute begins to run against any embezzlement or fraudulent conversion when it was committed, and not when it is discovered, or made manifest by a failure to pay over on demand. (Weimer v. People, 186 Ill. 503; Baschleben v. People, 188 Ill. 261.) The indictment here, which was returned April 21, 1948, recites, based on terms of the trust agreement, that title to the funds for dividend No. 1 passed to the class A certificate holders on December 28, 1942, when it was deposited in the bank, and that the embezzlement of $10,398.31 of such funds was completed on March 6, 1946. The theory of the prosecution is that the embezzlement began on February 27, 1946, on which date there was still $12,325.72 on deposit in the dividend account, which amount included the $10,398.31 belonging to the persons named in the indictment; that on February 27, 1946, by reason of payments to persons other than dividend No. 1 owners, the amount was reduced to $9,027.03; that defendant by reason of successive withdrawals by check paid out all of the $10,398.31 by March 6, 1946, on which date the continuing conversion became complete by reason of his overdrawing the account in the sum of $48.63. The defendant contends that if any embezzlement or conversion took place it happened between June 3, 1944, and June 12, 1944, the first date being the day the second dividend was declared and a deposit of $12,658.03 short of the amount necessary to pay it placed in the dividend account, and the second date being the day by which $23,249.00 had been paid out of the unsegregated account. Relying on the banking custom of "first money in, first money out," he urges that the use of dividend No. 1 funds to pay dividend No. 2 owners must have taken place more than three years prior to the return of the indictment herein.

We are constrained to agree with the trial court that the presumption of first money in, first money out, which is applicable to a bank and its depositors where the relationship is one of debtor and creditor, is not applicable to the case at bar for the reason that the character of the deposits is different from current bank deposits. The trust indenture here provides that the deposit in the bank was deemed payment of the dividend to the certificate holders. It was the absolute duty of the defendant to use the funds deposited for the first dividend for the payment thereof and for no other purpose, and if such funds were not distributed within five years to pay them over to the Auditor of Public Accounts to be held for the persons entitled thereto. It is a conclusive presumption in equity that a trustee dissipates or spends his own funds first, before touching or encroaching upon the trust funds. (People ex rel. Nelson v. Peoples Bank and Trust Co. 353 Ill. 479.) Further, it is a general rule that a trustee is presumed to have acted in good faith and to have performed his duties under the trust. (First-Trust Joint Stock Land Bank v. Hickok, 367 Ill. 144.) Thus, it may be presumed here that defendant complied with the trust indenture which gave and limited his powers, and by its terms he would have retained the unpaid portion of the first dividend until the last, i.e., just prior to and at the time the dividend account became depleted on March 6, 1946. Knowing that he could only use his first deposit for the payment of the first dividend to class A certificate holders, plaintiff in error deposited funds which could be paid only to second and third dividend owners into the same account without segregation. He paid owners of each class promiscuously from the funds so deposited, with no attempt to allocate withdrawals to the portion of the fund from which they should have been withdrawn. As stated by the trial court, "He should not now be permitted a different course of action than he, himself, established." The presumption of first money in, first money out, is not a defense on which defendant may rely. We have observed, as pointed out, other contentions on this question and find that the indictment was not barred by the Statute of Limitations.

The serious question presented is as to whether or not felonious intent was proved. Plaintiff in error has listed many points of evidence which he urges are indicative of his lack of felonious intent. They are: (1) That he at no time withdrew any of the dividend funds to his own use; (2) that no checks except dividend checks were paid out of the dividend account; (3) that he did not conceal the drawing of second and third dividend checks against the dividend account; (4) that all dividend checks for dividend No. 1 were drawn, signed and available to all class A certificate holders; (5) that notices were sent to all class A holders; (6) that every person who called at his office received a check; (7) that he offered in court to pay in full those class A certificate holders who did not receive their first dividend; (8) that there was no concealment or secrecy as to any matter on his part; and, (9) that he was prevented from making further payments by the appointment of a receiver.

Plaintiff in error urges that at no time did he withdraw any of the dividend funds for his own use. The People contend that when plaintiff in error made his payments on the second and third dividends he converted the funds to his own use as completely as if he had drawn a check to pay some personal or private obligation; and while it is true that the conversion need not be for his own use but may be for another, certainly it is a fact to be considered along with all other facts in determining the question of felonious intent. We held, in the case of People v. Ervin, 342 Ill. 421, "Mere proof of the receipt of funds and failure to account therefor is not sufficient, in itself, to show embezzlement. There must be other evidence of the conversion. (People v. Davis, 269 Ill. 256.) One of the elements necessary to be proved to constitute the crime of embezzlement is a criminal intent." Great latitude is allowed in proving intent where intent is an essential element of the crime charged, but a defendant charged ...

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