(256 F.) COUTURE v. UNITED STATES. (Circuit Court of Appeals, Eighth Circuit. March 12, 1919.) No. 5217. 1. LARCENY 7-STEALING PROPERTY OF UNITED STATES. One is not guilty of stealing property of the United States, in violation of Penal Code, § 47 (Comp. St. § 10214), where it was the property of and in custody of an Indian, though he was under the guardianship of the United States. There are no common-law offenses against the United States. In Error to the District Court of the United States for the District of North Dakota; Martin J. Wade, Judge. Joseph Couture was convicted of stealing property of the United States, and brings error. Reversed. E. T. Burke, of Bismarck, N. D., and Sullivan & Sullivan, of Mandan, N. D., for plaintiff in error. M. A. Hildreth, U. S. Atty., of Fargo, N. D. (John Carmody, Asst. U. S. Atty., of Fargo, N. D., on the brief), for the United States. Before HOOK and CARLAND, Circuit Judges. CARLAND, Circuit Judge. Couture was charged as follows: "That heretofore, and on or about the 5th day of July, in the year of our Lord 1916, at the Standing Rock Indian reservation, in the county of Sioux, state and district of North Dakota, and within the jurisdiction of this court, one Joseph Couture, late of said county, state, and district aforesaid, then and there being, did willfully, unlawfully, and feloniously take, steal and carry away one bay horse then and there the property of the United States of America, and held in trust for an Indian known as Edward Takes-the-Shield, of the Standing Rock Indian reservation; the said Edward Takes-the-Shield being then and there an Indian under the charge of a superintendent of an Indian reservation, which said property was of the value of five hundred dollars ($500)." He demurred to the indictment on the ground that it did not state facts sufficient to constitute a crime against the United States. If the indictment charges the stealing of United States property, it is good; otherwise not. As the same question was raised by motion for a directed verdict, we prefer to consider the matter on that assignment. The bill of exceptions has attached to it a certificate of the trial judge that the bill contains all the evidence taken at the trial. From the bill it appears that evidence was introduced tending to show: "That on the 5th day of July, 1916, one horse, branded 135, was stolen from land adjoining the town of Cannon Ball, claimed by the government to be a part of the Standing Rock Indian reservation in the state of North Dakota. That Edward Takes-the-Shield, a member of the Sioux Tribe of Indians, was born on the Standing Rock Indian reservation and had lived there all of his For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes life, and said Edward Takes-the Shield was an allottee Indian, holding his land under what is called a trust patent issued by the government, and that his home was on said allotment on the 5th day of July, 1916. That he was under the charge of an Indian agent or superintendent. That one of his children, who had held an allotment under a trust patent, had died, leaving said Edward Takes-the-Shield as sole heir. That the allotment of said deceased child had been sold under the direction of the Secretary of the Interior and the proceeds deposited with the Indian agent on the Standing Rock Indian reservation. That the horse in question was purchased by the Indian out of proceeds of the aforesaid allotment, after a consultation with the approval of the Indian agent, from a white man named Beldon, who was not in any way connected with the agency. "That Edward Takes-the-Shield arranged for the purchase of and selected the horse, the purchase taking place about three years before the alleged larceny. The evidence further showed that in the practice at that agency the horse could not be sold or disposed of in any way by the said Takes-the-Shield, without the consent of the Indian agent or superintendent. That the horse was when stolen, in the custody of Edward Takes-the-Shield, who had taken it with him to a celebration at the town of Cannon Ball, and he had the horse hobbled and feeding on land near where the celebration was held." [1, 2] As authority for the indictment we are referred to section 47, U. S. Penal Code (Act March 4, 1909, c. 321, 35 Stat. 1097 [Comp. St. § 10214]). This section provides for the punishment of stealing property of the United States. The trial court had jurisdiction to punish the stealing of property of the United States but it had no general common-law jurisdiction to punish the stealing of the property of any one within its territorial jurisdiction. Before a man can be punished, his case must be plainly and unmistakably within the statute. United States v. Lacher, 134 U. S. 624, 10 Sup. Ct. 625, 33 L. Ed. 1080. An offense which may be the subject of criminal procedure is an act committed or omitted in violation of a public law either forbidding or commanding it. United States v. Eaton, 144 U. S. 677, 12 Sup. Ct. 764, 36 L. Ed. 591. There are no common-law offenses against the United States. United States v. Britton, 108 U. S. 199, 2 Sup. Ct. 531, 27 L. Ed. 698; United States v. Hudson, 7 Cranch, 32, 3 L. Ed. 259; Tennessee v. Davis, 100 U. S. 257, 25 L. Ed. 648; Benson v. McMahon, 127 U. S. 457, 8 Sup. Ct. 1240, 32 L. Ed. 234; United States v. Eaton, supra. It must be conceded, we think, that the horse stolen from the possession of Takes-the-Shield was not the property of the United States within the meaning of section 47 of the Penal Code. Conceding that larceny may be committed from a trustee in possession of personal property, it does not help the case of the prosecution for two reasons. The horse was not in the possession of the United States if they were trustees when it was stolen, and no statute of the United States punishes the stealing of property from the United States when they simply occupy the position of guardian towards the owner thereof. The civil cases cited by the prosecution, where the courts have maintained suits by the United States to protect the property of Indians, have no application, because in those cases the court having jurisdiction has the whole field of law and equity to which it may resort. We are therefore of the opinion that, if the indictment charged the (256 F.) stealing of United States property, the proof failed. If it alleged that the property was held in trust by the United States, then the proof did no show an offense punishable under the laws of the United States. Judgment reversed. FIRST NAT. BANK OF SCOTTDALE v. BLACKBURN. In re KENNEY. (Circuit Court of Appeals, Third Circuit. March 11, 1919.) No. 2420. 1. BANKRUPTCY 165(1)-PREFERENCE-INDIRECT PAYMENT. Where joint maker of a note, after becoming bankrupt, paid its face value to the other maker, who in turn paid payee, the payment may be recovered as a preference, if payee bank had reasonable cause to believe transfer would effect a preference, for the circuitous method of payment does not defeat recovery. 2. BANKRUPTCY 165(1)—PREFERENCE-REQUESTED INSTRUCTION. A requested instruction, that money paid by bankrupt while insolvent could not be recovered as a preference, unless it was paid to discharge a primary indebtedness of the bankrupt, held erroneous. In Error to the District Court of the United States for the Western District of Pennsylvania; Charles P. Orr, Judge. Action by A. W. Blackburn, trustee in bankruptcy, of the estate of John Franklin Kenney, against the First National Bank of Scottdale. Judgment for plaintiff, and defendant brings error. Affirmed. The eighth assignment of error is as follows: (8) The court erred in refusing to affirm the seventh point of the defendant, to wit: "7. If the jury believe from the evidence that the $600 note, which is a part of the $3,100 paid to the bank on October 30, 1914, was not a primary indebtedness of J. F. Kenney, the bankrupt, the bank, the defendant in this case, cannot be charged with receiving said amount in preference to Kenney's other creditors." Edmond Englert, of Pittsburgh, Pa., for plaintiff in error. Before BUFFINGTON and WOOLLEY, Circuit Judges, and THOMSON, District Judge. THOMSON, District Judge. The First National Bank of Scottdale seeks by this appeal to reverse the judgment of the court below, which is based upon an alleged illegal preference obtained by the appellant in the bankrupt estate of John Franklin Kenney. The material facts are these: Kenney, the bankrupt, since 1912, was engaged in the ladies' and gents' furnishing business in Scottdale, Pa.; the business being managed by one Falk. Kenney borrowed certain mon For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes eys from the appellant bank, on notes which from time to time were renewed, three of which form the basis of the plaintiff's claim. These notes were signed by Kenney and Falk as joint makers, with a responsible indorser on each note. On the stock of goods insurance. had been taken out by Kenney in six different companies, in the aggregate amount of $8,500. On May 24, 1914, a fire occurred; the loss on the goods being adjusted pro rata among the insurance companies. On October 6, 1914, involuntary proceedings in bankruptcy were commenced against Kenney, in which, on July 6, 1915, he was adjudged a bankrupt. At the date of the filing of the petition, Kenney was indebted to the bank on notes, executed in the manner aforesaid, in the sum of $3,650. One of these, for $550, having afterwards been paid by the indorser, is eliminated from this case, leaving the indebtedness to the bank material here $3,100, represented by three notes, of $1,500, $1,000, and $600, respectively. After the adjustment of the loss, and before the bankruptcy proceedings, the policies were assigned by Kenney to the cashier of the appellant bank; the acceptance of such assignments, however, being denied by the bank. After the date of the bankruptcy proceedings, to wit, on October 26, 1914, two vouchers, each in the sum of $1,822.23, were drawn for the insurance moneys, one to the order of Charles Louchs, cashier of the bank, assignee of Kenney, and the other to the order of Kenney and Louchs, cashier. These vouchers were sent to Kenney, and after proper indorsement were delivered to the bank, which collected them; the proceeds, on October 30, 1914, being deposited by the bank in the account of Kenney. On the same day Kenney drew his check on the said fund to Falk for $3,100, who thereupon deposited the check in his own account in the appellant bank, and on the same day drew his check thereon to the bank, paying off in fulll the three notes, amounting to $3,100, on which he and Kenney were the joint makers. The trustee of Kenney brought suit against the bank to recover this $3,100, on the ground that it was an illegal preference, and obtained judgment in the court below. [1] The payment to the bank was made after the proceedings in bankruptcy were commenced and when Kenney was insolvent. It was made indirectly by Kenney by the hand of Falk, but "circuity of arrangement does not avail to defeat it." It was made out of Kenney's funds, by which his estate was diminished, which fact, under all the circumstances, the bank must have known. The effect of the payment was to enable the bank to receive a greater percentage of its debt than other creditors of the same class. We have present, then, all the elements which, under the act of Congress (Act July 1, 1898, c. 541, § 60, 30 Stat. 562, as amended [Comp. St. § 9644]), constitute a preference. This being true, such preference is voidable at the instance of the trustee, if the bank, at the time it received the money, had reasonable cause to believe that the enforcement of the transfer would effect a preference. This question of fact was submitted to the jury under proper instructions, and was found against the appellant. Appellant's counsel insist that Falk doubtless received a preference (256 F.) from Kenney, and that the trustee of Kenney could proceed against him, but that this does not apply to the bank; that the latter received its money when tendered by Falk, as it was compelled to do, and that in the absence of fraud or conspiracy to defraud, there is nothing to fix a preference against the bank. To sustain this contention, the case of National Bank of Newport v. National Herkimer County Bank, 225 U. S. 178, 32 Sup. Ct. 633, 56 L. Ed. 1042, is cited. The case does not sustain appellant's contention. The payment there made did not proceed, either directly or indirectly, from the bankrupt, and the bankrupt's estate was in no manner depleted thereby. The payment was made by a third party out of its own funds, its standing being separate and apart from that of the bankrupt. The very reverse is true in the case at bar. While the payment was made by Falk it was not his money, but the bankrupt's; the payment depleting the bankrupt's estate, and the creditor being benefited thereby. [2] The fourth, fifth, and sixth assignments of error were withdrawn at the argument. It would have been error to have given the instruction called for in the eighth assignment. In the second, third, and seventh assignments the court was asked to give binding instructions for the defendant. Such instruction would have been wholly unwarranted under the evidence. Finding no error in the record, the judgment is affirmed. 256 F.-34 |