Revised Statutes. The purchase of its own stock by the association, except to secure a debt due it, is forbidden by law. Is a purchase for the use of a banking association of its own stock by its president, when not necessary to secure a debt due the association, a willful misapplication of its funds, punishable by section 5209? We think the willful misapplication made an offense by this statute means a misapplication for the use, benefit, or gain of the party charged, or of some company or person other than the association. Therefore, to constitute the offense of willful misapplication, there must be a conversion to his own use or the use of some one else of the moneys and funds of the association by the party charged. This essential element of the offense is not averred in the counts under consideration, but is negatived by the averment that the shares purchased by the defendant was held by him in trust for the use of the association, and there is no averment of a conversion by the defendant to bis own use or the use of any other person of the funds used in the purchase of the shares. The counts, therefore, charge maladministration of the affairs of the bank, rather than criminal misapplication of its funds.

If we hold these counts to be good, then every official act of any officer, clerk, or agent of a banking association, by which its funds are applied in a way not authorized by law, would be punishable under section 5209.

For instance, section 5200 of the Revised Statutes declares that "the total liabilities to any association of any person, for money borrowed, shall at no time exceed one-tenth part of the capital stock of the association actually paid in." Section 5201 provides that no association shall make any loan or discount on the security of the shares of its own capital stock, unless such security shall be necessary to prevent loss on a previously-contracted debt. If the counts under consideration are sustained, then every president, director, cashier, teller, clerk, or agent of a banking association, who has any part in lending the money of the association contrary to the provisions of these sections, is guilty of a criminal misapplication of its funds. So, by section 5137 of the Revised Statutes, the purposes for which a banking association may purchase and hold real estate are limited, and specifically pointed out. If the directors of a banking association should authorize the purchase of a piece of real estate for its use, but not for purposes authorized by the statute, even though with intent to injure some corporate body or natural person, it could hardly be claimed that the directors

who made the order, and the other officers or agents of the associa tion who, with a like intent, had any hand in making the purchase or in paying out the money of the bank therefor, would be liable to indictment and imprisonment under section 5209.

The act charged by the counts under consideration are preciselyg of the same character as those just mentioned. They are acts of maladministration of the affairs of the association by its officers. The penalty for such acts is prescribed by section 5239, which declares:

"If the directors of any national banking association shall knowingly violate, or knowingly permit any of the officers, agents, or servants of the association to violate, any of the provisions of this title, ["National Banks,”] all the rights, privileges, and franchises of the association shall be hereby forfeited.

* And in case of such violation, every director who participated in or assented to the same shall be held liable in his personal and individual capacity for all damages which the association, its shareholders, or any other person shall have sustained in consequence of such violation."

We are, therefore, of opinion that the willful misapplication of the moneys and funds of the banking association, which is made an offense by section 5209, means something different from the acts of official maladministration referred to in section 5239, and it must be a willful misapplication for the use or benefit of the party charged, or of some person or company other than the association, with intent to injure and defraud the association or some other body corporate, or some natural person.

As the counts under consideration, namely, count 77, and the similar counts down to and including count 96, do not show that the willful misapplication therein alleged was made by the defendant for his own use, benefit, or advantage, but for the use of the association, we are of opinion that they do not allege an offense under section 5209, and are, therefore, insufficient and bad. The counts are, in our opinion, bad also for repugnancy. They aver that the defendant purchased the shares of the association and held them in trust for the association. This charge, without further averments, is clearly repugnant. It is true that it is possible for an officer of a banking association, with intent to defraud it, to misappropriate its funds in the purchase for its use of its own stock. But the count which avers such an act should also make other averments to show that the application was not merely a use of the money for the benefit of the association forbidden by law, but a criminal misapplication, by which it was possible that the association could be defrauded.

699.

t

For the reasons assigned, the counts next following, numbered from 97 to 116, inclusive, which are similar to count 77, except that they severally fail to aver that the act therein charged was done with intent to injure and defraud, must be held to be insufficient. The counts last mentioned, as well as the counts numbered from 56 to 76, inclusive, are bad for the further reason that they fail to aver any intent to injure and defraud mentioned in section 5209. The intent to injure and defraud is an essential ingredient to every offense specified in the section, and the failure to aver the intent is a fatal defect in the counts in which it occurs.

We shall next consider count numbered 37 and the counts which are similar to it. These counts simply charge that the defendant, being president of the association, willfully misapplied its moneys and funds by buying therewith certain shares of its stock, with intent to injure and defraud the association and certain persons to the grand jurors unknown.

The words "willfully misapplied" are, so far as we know, new in statutes creating offenses, and they are not used in describing any offense at common law. They have no settled technical meaning like the word "embezzle," as used in the statutes, or the words "steal, take, and carry away," as used at common law. They do not, therefore, of themselves fully and clearly set forth every element of the offense charged. It would not be sufficient simply to aver that the defendant "willfully misapplied" the funds of the association. This 18 well settled by the authorities we have already cited. There must be averments to show how the application was made and that it was an unlawful one. These averments the pleader has in these counts attempted to make by charging that the defendant paid out the funds of the association in the purchase of its own stock. But this is not necessarily an unlawful use of the funds of the association. It is not every purchase of its own shares by an association that is forbidden. The very section (5201) and sentence of the statute which declares. that no banking association shall be a purchaser of its own shares, contains the exception "unless such purchase shall be necessary to prevent loss upon a debt previously contracted in good faith." This exception should have been negatived in these counts. The rule of pleading, as laid down by Mr. Chitty, is that "when a statute contains provisos and exceptions in distinct clauses it is not necessary to state in the indictment that the defendant does not come within the exceptions, or to negative the provisos it contains. On the contrary, if the exceptions themselves are stated in the enacting clause

2

it will be necessary to negative them in order that the description of the crime may in all respects correspond with the statute." 1 Chit. Crim. Law, *283, *284.

Thus, where a statute declared that if one on the Sabbath day "shall exercise any secular labor, business, or employment, except such only as works of necessity and charity, he shall be punished," etc., a negative of the exception was held indispensable. State v. Barker, 18 Vt. 195. See, also, Com. v. Maxwell, 2 Pick. 139; 1 East, 167; Spieres v. Parker, 1 Term R. 141; Gill v. Scrivens, 7 Term R. 27; 1 Bish. Crim. Proc. § 636.

The failure of the counts under consideration to aver that the purchase of the shares of the association was not necessary to prevent loss upon a debt previously contracted in good faith is a fatal defect. These counts merely charge that the defendant willfully misapplied the funds of the association, and then aver a use of the funds, which, from all that appears to the contrary, was a perfectly-lawful application of them. The result is that no offense is described in the counts numbered from 37 to 56, inclusive, and that they are, therefore, insufficient and bad. It also follows that counts numbered from 57 to 76, inclusive, which are similar to the series just mentioned, except that they contain no charge of intent to injure and defraud, are also bad.

What we have said disposes of all the questions propounded to us which it is necessary that we should answer. We answer the first, second, seventh, and ninth questions in the affirmative, and the fifth, sixth, and eighth questions in the negative. From these answers it appears that all the counts from the thirty-seventh to the one hundred and eighteenth, inclusive, are insufficient and bad. We therefore decline to answer the third and fourth questions, which relate to the same counts. U. S. v. Buzzo, 18 Wall. 125.

(108 U. S. 192)

UNITED STATES v. BRITTON and another. (No. 411.)

(April 2, 1883.)

BANKING ASSOCIATION-MISAPPLICATION OF FUNDS-CONSPIRACY. WOODS, J. In this case the indictment contained two counts. They charged a conspiracy between James H. Britton and Barton Bates, the first being president and a director and the latter a director

of the same banking association, to misapply its funds by the purchase therewith of the shares of the association. The first count described the offense which defendants conspired to commit substantially as it is set forth in count 77, and the second count described the offense as the same is set forth in count 97, in the case just decided.

The judges of the circuit court were divided in opinion upon the question whether the counts sufficiently stated an offense under sections 5209 and 5440 of the Revised Statutes, and the same has been duly certified to us for our opinion. What we have said in the case just decided [U. S. v. Britton, ante, 512,] disposes of this question. We answer it in the negative.

(108 U. S. 198)

UNITED STATES v. BRITTON. (No. 407.)

(April 2, 1883.)

NATIONAL BANKING ASSOCIATION-INSOLVENT OFFICER PROCURING DISCOUNT OF HIS OWN NOTE-ALLOWING DEBTOR TO WITHDRAW HIS FUNDSWILLFUL MISAPPLICATION OF FUNDS.

Where an officer of a banking association, being insolvent, submits his own note, with an insolvent indorser as security, to the board of directors for discount, and they, knowing the facts, order it to be discounted, the use by the officer of the proceeds of the discount for his own purposes will not be a willful misapplication of the funds of the bank, and subject him to a criminal prosecution under section 5209 of the Revised Statutes.

A count that charges that defendant, the president of a banking association, failed to apply certain funds standing to the credit of a debtor of such association to the payments of his indebtedness, and permitted such debtor to withdraw his funds from the association and transfer them to another bank, does not charge a criminal misapplication by defendant of the moneys and funds of the association, and is bad.

On a Certificate of Division in Opinion between the Judges of the Circuit Court of the United States for the Eastern District of Missouri.

The indictment in this case contained three counts. It was found by the same grand jury as the indictment in case No. 406, just decided, [ante, 512,] and was remitted and transferred to the circuit court in like manner.

The first count charged that the defendant, James H. Britton, on March 24, 1877, within the eastern district of Missouri, being the president and a director of the National Bank of the State of Mis