Schnackenberg, Kiley and Fairchild, Circuit Judges.
SCHNACKENBERG, Circuit Judge.
Howard B. Quinn, defendant, has appealed from his conviction under count I of an indictment*fn1 sentencing him to three years imprisonment.
The charge against Quinn was that, in violation of § 657 Title 18, U.S.C., on April 3, 1963, he unlawfully and wilfully misapplied funds of the Beverly Savings and Loan Association (Beverly), by fraudulenting causing its check for $553,166.66 to be drawn and wilfully converting same to his own use, which check purportedly represented a four-year prepayment*fn2 of rent by Beverly to Quinn Management Company.
Under date of February 6, 1962, Beverly had leased its premises from Quinn Management Company under a twenty-year lease*fn3 reserving an annual rental of $150,000 plus a percentage, which resulted in a total base rate of $3,000,000. Joseph Geisen, president of Beverly, and Miss Lana, its secretary, signed the lease for Beverly although it had not been approved by its board of directors.
Beverly moved into the new quarters in June, 1962. It occupied part of a nine-story building, which also contained other enterprises of Quinn. Prior to the prepayment of April 3, 1963, rent had been paid monthly, there had been no prepayment of rent, and there had been no security deposit.
Quinn was known to all concerned as the landlord of Beverly. He was a director and chairman of the board of directors of Beverly. He and his family owned about 66% of the Beverly stock, and Charlotte, his wife, was a director of the association. Quinn shared an office in the building with president Geisen. Defendant's control of Beverly's financial operations is shown in the evidence by his recommendation to increase the authorized outstanding shares of stock so as to meet its dividend which was approved at the February 23, 1963 meeting of the directors.
In early March, 1963, Quinn was notified by the mortgage holder of his building that his mortgage payments were then delinquent. Thereafter, on three separate occasions before the March 28, 1963 board meeting, Geisen and Quinn discussed the prepayment of rent by Beverly. Geisen testified he had specifically informed Quinn in these discussions that a prepayment of rent would jeopardize Beverly's liquidity position, undermine the association's security for mortgage payments, and would amount to nothing more than a loan to him by the association, which would not be proper.
Documentary evidence shows that the financial condition of Quinn's other businesses and companies was deteriorating and that, between March 28 and April 2, 1963, he or his wife had written checks totaling $314,249 on the Quinn Management Company account in the Pullman Bank in which there was a balance of only a few thousand dollars. This figure does not include a check for $236,585 used by Quinn to purchase recently issued shares of Beverly, which, when added to the $314,249, equalled $550,834 or only $2332.56 less than the $553,166.66 claimed to have been misapplied.
At the March meeting no motion was presented regarding any prepayment of rent nor was any approval given for any such prepayment, although Geisen testified that defendant stated to the board that, in considering a prepayment of rent, a 5% discount would be given. However, director Douglass objected that 5% would not be a proper return on the association's funds.
Gerald Ahern testified that he was comptroller and treasurer of Beverly and that on April 2, 1963, defendant told him "to draw a check for four years' prepayment of rent, and that this was approved by the board of directors at a recent meeting * * *." He also testified that he had two checks drawn payable to the La Salle National Bank, as trustee, aggregating in excess of $550,000, for four years prepayment of rent. These checks he gave to the office manager for Quinn. The next morning defendant told Ahern to take the checks and change the payee from the La Salle National Bank under a trust number to Quinn Management Company. Ahern made out a check for $553,000 payable to that company at Quinn's direction. The requisition for this check was signed by defendant with the notation in Ahern's handwriting "Reason for disbursement; prepayment of rent expense, see board of directors approval on March 28, 1963."
On April 3, 1963 President Geisen learned from Ahern of the so-called prepayment of rent. The next morning he contacted Director Douglass and Mr. Culbertson, attorney for Beverly. As a result an emergency meeting of the Beverly board was called for April 5. Contrary to the prevalent feeling expressed among the members, Quinn said he thought he had authority to act as he did and told the board he had discussed it with Geisen. However, Quinn did acknowledge that Geisen had advised against it. Quinn agreed to restore the funds taken by April 23, 1963, when the bank's regular meeting was due, but on that date had restored only $53,166.66, leaving unpaid $500,000. At that meeting the lease between Beverly and the La Salle National Bank trust was finally approved.
1. Seeking reversal of the judgment of the district court, defense counsel argues that the actions of Quinn were done openly and in "broad daylight", and, as a matter of law, the prepayment of rent did not, therefore, constitute an act committed with that intent requisite to make it a felony.
On the other hand, the government argues that the facts and circumstances surrounding the taking of the $553,166.66 were sufficient to establish that Quinn acted for himself and in utter disregard of Beverly.
As we understand the theory of defense counsel, it is embodied in this statement in his brief:
"The very openness with which Quinn acted belies any idea that he acted with the felonious intent required for conviction under the statute, and the existence of a written contract right to receive over a period of time the money which he did receive would add the only other element required to negative criminal intent entirely."
We reject this contention. The jury would have been justified in believing from the evidence that defendant was a man exceptionally well-versed in the financial operations in which he was engaged and that the method which he used in accomplishing the misapplication of funds of Beverly was willful and knowingly wrong. That he took them under the guise of a so-called prepayment of rent does not alter the fact that he misapplied the funds.
Defense counsel cites Morissette v. United States, 342 U.S. 246, 72 S. Ct. 240, 96 L. Ed. 288 (1952). The instant case is different from Morissette in which plaintiff, a fruitstand operator in summer and in winter a scrapiron collector, unsuccessfully hunted deer, but made the mistake of trying to meet his expenses of the trip by salvaging some spent bomb casings of air-force-dropped simulated bombs at ground targets in a government owned range located in good deer hunting country. Plaintiff, who testified at his trial, found the bomb casings which had been thrown into piles but not stacked or piled in any particular order and some of them had been exposed to the weather for over four years and were rusting away. He believed the casings were abandoned and had no intent to steal property. Morissette loaded some on his truck and had a farmer flatten them with a tractor. He sold the material thus obtained for $84. All that he did was in full view of passersby.
Indicted for stealing property of the United States, of a value of $84, the United States government prosecuted him and he was convicted and sentenced to two months imprisonment or a fine of $200, as a result of which this case went through all ...