People v. Thomas

Deposit with a broker to be used as a margin for speculation — what failure to repay it does not constitute larceny. A client of the brokerage firm, of J. G. Stewart & Co., which did business through the brokerage firm of W. B. Smith & Co., delivered to the former firm checks payable to the order of the latter firm' with the intent that such checks should be used as margins on his account. The checks were delivered to W. B. Smith & Co. and were credited by that firm to the account of J. G. Stewart & Oo. Upon the termination of the transactions, the firm of W. B. Smith & Oo. delivered to Stewart & Oo. a check for the balance of the account. Stewart & Co. did not turn over the check to their client who, there was. some evidence tending to show, was their sole customer. Held, that such check could not be considered the property of the client, and that consequently the failure of Stewart & Co. to deliver such check or the proceeds thereof to the client did not constitute a misappropriation by that firm of moneys which it held as bailee or in a fiduciary capacity and thus constitute-the crime of larceny under section 538 of the Penal Code.

Appeal by the defendant, George W. Thomas, from a judgment of the Court of General Sessions of the Peace in and for the city and county of New York, in favor of the plaintiff, entered on the 31st day of January, 1900, convicting the defendant of tlie crime of grand larceny in the first degree. The count of the indictment upon which the defendant was convicted charged him with having feloniously appropriated to his own use on April 20, 1899, while bailee and trustee of Victor Von Zeibel, moneys in his possession belonging to the said Von Zeibel amounting to $685.32. At the trial Von Zeibel testified that he was introduced to the defendant as the manager of the firm of J. Gr. Stewart & Co., and first met him at the office of that company, and on April 14 and 15, 1899, gave him two checks for $300 and $250 respectively, and told the defendant he “ wanted to make business in the firm of Stewart & Company,” and offered to put in his money to speculate to be used as margins for buying and selling, and the defendant told him W. B. Smith & Co. were brokers through whom Stewart & Co. worked in the Consolidated Exchange, and requested the checks to be made to the order of Smith & Co., to be credited to his account; that the checks were so drawn and deposited, and he gave to the defendant various orders for the purchase and sale of stock or wheat and received regular reports every day of the transactions, and there was nothing said prior to April nineteenth as to how the account stood, except that he and the defendant figured profits, and he made the profits to be about $500, and on the nineteenth asked the defend-, ant for $300, as he wanted to take out the profits as soon as made that the defendant said there was no objection, and sent a clerk to Smith & Co. with a receipt for $300, and the clerk, on returning, said the books were not yet fixed, and the defendant said it was all right and that was the regular way, and that the money would come later, as soon as they had fixed up his (Von Zeibel’s) account; that on returning to the office of Stewart & Co. later in the day he found the defendant gone; that Smith & Co. is a reputable firm, a member of the exchange, and he knew that it had received his checks, but the money was due him from Stewart & Co.; that he went to see the defendant again on the morning of the twentieth and he was not in the office, and Mr. Romer, who Avas there, showed him a bill of sale of the furniture, dated April nineteenth, and he did not see the defendant again before he was arrested, but a few days after the twentieth found the office unoccupied. On cross-examination the complainant testified that Mr. Wester was not interested with him and did not speculate with him, but gave him advice and used his account and gave Stewart & Co. directions with reference to his speculations; that he told the defendant that he and not Mr. Wester was to give directions, and that when one of the bought and sold notices referred to Mr. Wester he objected; that he did not know of the bookkeeping of the defendant and that the account was “Wester and Yon Zeibel; ” that he had been told that neither the defendant nor the firm of Stewart & Co. were members of any exchange. The witness was shown papers which he identified as “ all the orders ” he gave the defendant, adding that he received no money in return. On further inquiry he denied withdrawing on April eighteenth $75, and said that he did not know whether Mr. Wester had obtained that amount, but the, latter had no right to receive it; that he had bought privileges but he could not “ tell how often,” and upon looking at papers shown him, recognized only one time he had done so; and he could not remember whether he got a “ whole account ” from Stewart & Co. or not, but it was npt true that only $117.46 was due him. A clerk of Smith & Co. testified that prior to April fourteenth the defendant had dealt with and through that firm, and several statements had been rendered him, and there was not a new account thereafter, but a continuation of the old one, and it included stock, wheat and other transactions, and from April fourteenth to April twentieth orders were not marked any other way than previously, but there were entries April fourteenth, fifteenth, seventeenth and eighteenth; that the account showed a payment on April twentieth of $685.32 by check to Stewart & Co. which was given to defendant’s clerk and came back indorsed by the defendant. This ended the case of the People, and motion was made to direct an acquittal, which was denied. The defendant then took the stand in his own defense and testified that he had been a member of the firm of Stewart & Go. which had included himself and J. G-. Stewart, and as such firm he was individually carrying on brokerage in the spring of 1899 and down to April twentieth; that he was not a member of the exchange and his business consisted in getting clients to purchase stocks, the transactions being turned over to a firm on the exchange; that prior to April 14, 1899, Mr. Wester called and said he wished to handle some wheat and he told him he intended to leave May first, and advised him to handle it himself, but that on the fourteenth of April Yon Zeibel and Wester came in to open an account and he told them to go to Smith & Co. and deposit the money there, but, as they desired it, he opened an account in their names on his books and the checks were deposited by them witli Smith & Go.; that Wester gave directions as to the purchases and that subsequently an account was made up as the result of the transactions showing a balance due them of $117.46, they having previously received $75 in cash; that on the nineteenth of A pril Yon Zeibel" asked for $200 or $300 and the clerk referred to their account and he told the complainant that he could not pay him as the account was with Wester; that by the books there was then due them less than was asked for; that he had an account with Smith & Co. from February or March and it included three or four accounts, and this account with Smith & Co. was closed on April twentieth by a check which he received in settlement from that company and cashed; that on April nineteenth he disposed of his office business to Mr. Homer who was to carry on the place and left moneys with him to pay Yon Zeibel and Wester and thereafter went to Massachusetts and returned to New York May first, and thought everything was settled until the latter part of May. On cross-examination the defendant testified that he sent his clerk around to get the $300 requested and believed the clerk could not get it that morning, but was not positive ; that lie was at his office till one o’clock the next day, and the day before had conversation with Mr. Wester but not with Yon Zeibel; that the letters shown him bore the heading and stamp of his firm but were not all his, and he did not receive such orders and Yon Zeibel did not get those letters from him. George A. Homer testified that he purchased the defendant’s business and assumed the payment of certain creditors — whatever the book showed — and was prepared to repay whatever was presented, and the account of Yon Zeibel was one of the accounts; that the account of J. Stewart & Co. was continued with Smith & Co.; that Smith & Co. had two accounts one a running speculative account and one a commission account, and the latter went directly to Stewart & Co.; that as there were threatening law suits and he found the business unprofitable, he sold out the furniture the following day after the twentieth, paying rent up to May first, but he would have stayed liad the customers stayed. The complainant’s attorney testified that he had never personally demanded of defendant prior to his arrest the moneys in question, but went to the office several times and found it closed ; that the defendant’s attorney, Mi. Johnson, offered to give defendant’s notes as the best that could be done, and the amount claimed was $1,000; that the orders to Smith & Co. were not duplicates of the orders of Von Zeibel, but ,the defendant had used his own discretion, and part of the claim was based upon negligence and disobedience of orders. A cleric in the ofiice of Stewart & Co. testified that the account was in the name of "Wester & Von Zeibel and Wester gave directions for transactions made, and some cash was received by them, $75, which was handed to Wester, and the balance due was $117.46-; that on April nineteenth the defendant gave him a letter — Von Zeibel being then present — to go to Smith & Co. for some money and the request was refused, as there was only enough money to carry along the margins; that there were open trades by Von Zeibel’s orders, and a dozen orders were given by Wester on the account; that Stewart & Co. had half a dozen customers, and Smith & Co. did not know Von Zeibel and Wester in the transactions with defendant; that the account between the two firms included many transactions, some of which made a profit and some a loss, and “ the whole thing left $685 according to Smith’s statement,” for which amount a check was given to Stewart & Co.; that “ all these (transactions) belonged to different people, * * * for the simple reason that there were two or three accounts carried in that one account kept by Smith & Company.” The jury returned a verdict convicting the defendant of grand larceny in the first degree “ with a recommendation to the mercy of the court.” From the judgment of conviction thereupon entered sentencing the defendant to two years in State prison this appeal is taken.