Defendant was convicted on an indictment containing two counts each charging him with the crime of grand larceny in the first degree. The first count charges him with the felonious appropriation on January 11, 1935, of the sum of $600 which he then had "in his possession, custody and control as bailee, servant, attorney, agent, clerk and trustee of one Lillie Happy," said sum then being her property. The second count sets out certain specific acts which are alleged to arise out of and constitute a part of the same transaction as specified and set out in the first count. The indictment, in fact, contains but one charge and was so treated at the trial. That is necessarily so since there is no evidence to sustain the theory of the second count standing by itself. The theory there set out is that aspecific sum of money belonging to Lillie Happy, first in the possession of the partnership of R.C. Robinson Company, then in the possession of the R.C. Robinson Securities Corporation, and definitely earmarked as her money, was converted and misappropriated by defendant. Upon that theory, neither the indictment when read as a whole nor separately by count could be sustained.
It appears that Lillie Happy, a woman about seventy-five years of age at the time of the trial, first met defendant sometime between 1927 and 1929 when he was a salesman for a brokerage concern of Binghamton, N.Y., and purchased through him and that concern $4,000 worth of securities of an offering made by Clarence Hudson Company, New York city brokers. Subsequently, at least, she had stock and security dealings with other stock salesmen and brokers and she had other investments not made through defendant. In 1932 defendant opened an office in Ithaca, N Y, to deal in the Hudson Company offerings on his own account under the firm name of R.C. Robinson *Page 84 Company, of which he was the principal partner. The partnership business continued until August, 1934. In October and November, 1933, Miss Happy turned over to defendant $1,025 which he invested in Collateral Bankers' bonds. Later the bonds were sold by him. She gave him an additional $236.50, which made the aggregate sum of $1,261.50 of her money in his hands. That sum he invested in Bankers' Industrial Investing Corporation Class A stock, a Hudson offering, certificates for which were issued in her name and delivered to defendant. Although she says that she was not advised at the time of the making of that particular investment for her and knew nothing of it specifically, it is not asserted that defendant made any improper use of the money. She authorized him to invest it and handle any of such investments from it and change her securities at his option in any manner he saw fit. Subsequently she was notified of the making of the investment and indorsed the stock in blank for transfer. She left the stock in defendant's hands. The transactions were partnership affairs and the stock remained with the partnership as a partnership account. She testified that she did not know of subsequent transfer of securities or of investments made for her or on her account by defendant but she authorized the making of them and subsequently by her conduct ratified them. She received interest on those securities from the partnership while the partnership handled the account and a dividend from the Robinson Corporation on the subsequent investment in stock as later noted.
In August, 1934, the partnership business was incorporated under the name of the R.C. Robinson Securities Corporation and the business, assets and accounts of the partnership were turned over to the corporation. The corporation thus acquired or subsequently had some thirty employees, at least three branch offices, a large volume of business and a large number of brokerage accounts and upwards of 700 satisfied customers. Defendant was president of the corporation. The Lillie Happy account and securities were among those *Page 85 turned over to the corporation. In the early part of September, 1934, the stock then standing in her account was sold by the corporation for $1,087.50, which amount was deposited in the general checking account of the corporation at the First National Bank of Ithaca, N.Y., and she was credited on the books of the corporation with that sum less $5.25 taxes or a net sum of $1,082.25. Her account, as shown by the corporation books, was then debited with the sum of $1,000 which represented the purchase price of ten shares of the preferred capital stock of the R.C. Robinson Securities Corporation of the par value of $100 per share and a balance unused of $82.50 appears as a credit balance in her favor. The stock, however, was issued by the corporation in the name of the defendant and not in the name of Lillie Happy. The District Attorney asserts that the stock was, in fact, her property. The defendant so concedes and the evidence conclusively establishes it to be the fact. There was subsequently paid to her by the corporation and she received and accepted on October 10, 1934, one dividend on the stock. Such was the status of her account on December 31, 1934, and of her security holdings so far as defendant and the corporation are concerned. To that point no irregular dealings by the corporation or by defendant with her money or property are charged. None appears in the evidence. The relations and dealings between defendant and Miss Happy were by her authorization and approval and entirely satisfactory to her.
The alleged larceny occurred later. On December 31, 1934, the assistant treasurer of the corporation, upon the request of defendant who represented that Miss Happy needed money, issued a check on its general account in the First National Bank of Ithaca to the order of defendant for $400, and on January 11, 1935, another check for $600, both of which checks defendant deposited in his own personal account at the same bank and the proceeds were used by him to pay his own personal obligations, whereupon the assistant treasurer procured the stock certificate and canceled it on the books of the company. *Page 86
It is the position of the prosecution that the stock belonged to Miss Happy although not issued or registered in her name, that the money derived from the redemption of the stock by the corporation was her money and that defendant feloniously appropriated the same to his own use. On the merits, defendant asserts, first, that, at the most, only a relation of debtor and creditor existed between Miss Happy and himself and that the transaction furnished no basis for criminal prosecution against him; second, if there was any theft at all, it was from the corporation and not from Miss Happy, and, third, that he substituted and deposited with the corporation other securities as he had authority to do to replace the canceled stock. He urges that the indictment should have been dismissed but, if not, that substantial errors occurred on the trial which entitled him to a new trial.
Upon the conceded or undisputed facts, it seems to me that, if any money was stolen by defendant, it was not the money of Lillie Happy, but was the money of the corporation. It was and is the theory of the prosecution, as stated in the brief of the District Attorney, that the indictment taken as a whole charges larceny by a trustee of a specific item of property belonging to Miss Happy, to wit, the sum of $600. Concededly, defendant came rightfully into possession of her money in 1933 and subsequently rightfully invested and reinvested it for her in the Bankers Collateral bonds, in the Class A stock of the Bankers' Industrial Investing Corporation and in the preferred capital stock of the R.C. Robinson Securities Corporation. The investments were first made by and carried on the books of the partnership and subsequently by, and on the books of, the latter corporation. When the R.C. Robinson Corporation was organized, her investment in the Bankers' Industrial Investing Corporation Class A stock became a corporate account and the stock was carried in its portfolio as her stock. The money she gave Robinson in 1933 had lost its identity as her money long prior to the date of the alleged larceny. In September, 1934, the corporation had *Page 87 possession of the stock certificates indorsed by her in blank. When that stock was sold by the corporation, the check of the purchasers was made payable to the corporation, not to defendant, and the corporation collected the money on the check and deposited it in its general bank account. When the sale of those securities was closed and the moneys received, the corporation, not defendant, owed Miss Happy $1,082.25, the selling price of the stock. The obligation of defendant to Miss Happy, if any, arose not because he personally had any money of hers in his possession but on another basis entirely. He had no money belonging to her at that time in his possession. In the event of loss on investments, defendant was bound by the agreement between Miss Happy and himself to reimburse her to the extent thereof. Partially to satisfy its obligation, the corporation charged her on its books with $1,000 for the purchase price of ten shares of its own preferred capital stock. No money passed at any time from Miss Happy to the corporation. The corporation had in its possession no special fund earmarked as belonging to her. If any loss occurred for any reason whatsoever on account of that investment, the corporation may have been civilly liable. As between defendant and Miss Happy, defendant was liable only in a civil suit therefor, not on the basis of conversion but because of his guaranty to her against loss. When the corporation redeemed its own stock, its own checks on its own general account were issued and payment thereof was made out of its own general funds. Whether those checks were made payable to defendant or to any other person, its obligation to Miss Happy was not satisfied until she got the money. The corporation had definite notice that the stock belonged to her and acknowledged its debt to her. The account stood in her own name on its books. Out of it she had not authorized the corporation to pay any money to Robinson or to any one else. The payment of the $1,000 to Robinson did not satisfy the corporation debt to her, in whole or in part, no matter what representations Robinson made to the assistant treasurer to *Page 88 induce him to issue the checks. The bank account out of which the checks were cashed in December, 1934, and January, 1935, respectively, contained thousands of dollars of money belonging to it and to numerous of its customers, mixed and not separately earmarked for anybody. But it did not contain one dollar of money belonging to Miss Happy unless it was the balance of $82.25 to her credit on the corporation books, but even that had long since been mixed in the general corporation bank account with its other general funds and its identity had long since disappeared. What the corporation got for the stock it redeemed was a credit on Miss Happy's account of $1,000, not cash in hand. Miss Happy had nothing to do with the issuance of the checks or with the money obtained when they were cashed. She knew nothing of the transaction. It was the money of the corporation which defendant procured on misrepresentations of fact and used for his own purposes and not the money of Miss Happy which he is charged in the indictment with having feloniously appropriated to his own use. If defendant was trustee as to that particular money for any one, it was for the corporation and it was the money of the corporation that he misappropriated. The motions of defendant to dismiss the indictment on the ground that the People failed to prove the commission of the crime charged in the indictment should have been granted.
Nevertheless, if the refusal to dismiss the indictment on the above ground was not erroneous, numerous errors were committed on the trial of such gravity and so prejudicial to the rights of defendant that they cannot be overlooked.
The evidence is susceptible to no interpretation other than that Miss Happy turned over her money to defendant in 1933 to use and invest and reinvest as he saw fit. He had authority to invest it for her in the Collateral Bankers' bonds, in the stock of the Bankers' Industrial Investing Corporation and in the stock of the R.C. Robinson Securities Corporation, to use it whenever and however he saw fit in connection with any investment he might select, *Page 89 to substitute securities at will and generally to handle it in his sole discretion for her benefit. He guaranteed to reimburse her for any loss that might occur in such investments. She supervised or directed none of the investments. She said she had no thought that he stole any of her money and that she believed she had the right to hold him civilly for loss in investments and intended to hold him therefor in the event any loss occurred. Up to December, 1934, there is no evidence of any intent on his part to steal her money and nothing irregular is claimed in his dealings with it. All of that is from her own testimony. There is nothing to the contrary. Defendant testified to like effect. On the basis of the agreement made between Miss Happy and him, defendant claimed that any liability that existed against him arose only out of their relationship of debtor and creditor. He admitted that he owed her money in the event that loss occurred in the investments and was liable therefor on demand provided it should be held that he had not substituted and placed in the possession of the corporation securities in place of the stock. No demand for the return of any money was proven or claimed to have been made. Additionally, it might again be noted that he was not directed to invest the fund in any specific security or keep the fund intact. In fact, the fund was turned over to him for general investment purposes and not to be supervised or controlled by Miss Happy. He had no duty to hold the money intact in specific currency. He was specifically not to do that. He was not required to keep an equivalent fund available at all times for her use. On all the facts it appropriately might be found that the deposit with him was general, not specific, and that the only relation that existed was that of debtor and creditor. If such were the situation and that relation existed, there could be no larceny, at least, unless the money was not returned upon demand. Although the issue could not be decided, on the record, as one of law, and the weight of evidence might indicate a trust relation between defendant and her or between defendant and the corporation, there *Page 90 was evidence to support defendant's claim. It clearly raised an issue of fact sharply litigated from the beginning to the end of the trial and discussed in the summaries. Even though its weight was sufficient only to raise a reasonable doubt as to defendant's guilt, that would have been sufficient to require defendant's acquittal. The court, however, submitted no such claim or issue to the jury. Defendant then attempted to get the issue before the jury by requests to charge but without success, and refusal to submit the issue or to charge as requested, protected by exceptions, presents reversible error.
Defendant presented another defense which would have compelled an acquittal had the jury found the evidence sustained it. For that defense he relied mainly on his own testimony that, although he did take and use the cash received from the sale of Lillie Happy's stock, he did so because it belonged to him, since he substituted for the stock sold two Starrett Investing Corporation bonds from his personal holdings as indicated by an appropriate notation made at the time on the records of the R.C. Robinson Securities Corporation. Defendant's failure to produce the entries made was explained by the fact that some three years and a half prior to the trial an injunction proceeding was commenced by the Attorney-General in which a receiver was appointed who took possession of all of the books and effects of the corporation. Over defendant's objection and exception, rebuttal testimony was allowed to be elicited by the District Attorney from two of defendant's witnesses to the effect that the records of the R.C. Robinson Securities Corporation indicated ownership of all of the sixteen Starrett bonds found by the receiver among the effects of the corporation in persons other than Lillie Happy or the defendant. The records described as indicating the ownership of the bonds were not produced nor was any attempt made to explain the failure to do so. These witnesses were thus allowed to testify as to their opinions and conclusions on the very question which the jury was to decide, viz., whether or not the defendant transferred certain bonds to Lillie *Page 91 Happy's account as shown by a notation on the records of the corporation. This evidence also flagrantly offends against the best evidence rule, for, certainly, the records themselves were the best evidence of what they contained or indicated (3 Black. Comm. 368; Butler v. Mail Express Publishing Co., 171 N.Y. 208,211; Mahaney v. Carr, 175 N.Y. 454, 462; Trombley v.Seligman, 191 N.Y. 400, 403; Code Crim. Proc. § 392). Equally inadmissible, for the same reasons, was a record received in evidence as Exhibit 50 which purported to show the name, numbers and the names of the owners of the bonds found by the receiver when he took over. Concededly, this record was not a corporate record but was prepared by an assistant to the receiver at the request of the receiver subsequent to the defendant's severing of his connections with the corporation from information purported to be contained in the books and records of the corporation which were not produced.
It is urged that no prejudice resulted from the admission of this evidence for the reason that one witness testified to the same facts from his own personal knowledge and recollection. A comprehensive search of the record has failed to reveal such testimony. On the contrary, it appears that all testimony concerning the ownership of the bonds was limited to what it was claimed the records showed. It is true that the bookkeeper, who was also an officer of the corporation, testified from personal knowledge as to certain transactions involving two Starrett bonds, but subsequently he denied any personal recollection as to the identity of the two bonds in question. It cannot be said that the erroneous admission of this evidence did not affect the substantial rights of the defendant. Conviction or acquittal depended on whether the jury believed the testimony of the defendant on a crucial point in the case and incompetent evidence was admitted to contradict him.
In reversing another conviction of this same defendant under a different indictment this court pointed out that questions concerning irregularities and other larcenies uncovered in an investigation into the defendant's business *Page 92 affairs were incompetent and prejudicial (People v. Robinson,273 N.Y. 438, 445). An exactly similar error is present in the record now before us. Here, the bookkeeper was allowed to testify, over the defendant's objection and exception, that when he returned to the office after having been absent on a vacation for some time, he discovered that defendant's accounts were short. No logical or evidentiary connection has been or can be shown between that larceny, if it was one, and the one for which the defendant was on trial. The evidence appears to have been admitted solely to prove the defendant's propensity for irregularities and larcenies in the conduct of his business.
Many other errors are alleged upon this appeal. Some are so substantial as to merit serious consideration. However, without further considering them, it seems clear to me that the errors above discussed are so substantial and prejudicial that they cannot be overlooked and warrant a reversal of the judgment appealed from and the granting of a new trial, although I am personally of the opinion that, on the ground first above stated, the indictment should be dismissed and the defendant discharged.
LEHMAN, Ch. J., LOUGHRAN, SEARS and CONWAY, JJ., concur with LEWIS, J.; RIPPEY, J., dissents in opinion, in which FINCH, J., concurs.
Judgment affirmed. *Page 93