check of Lentre Rosconi of $ 4700, when it arrived at the Cecil Bank in the Federal Reserve cash letter of September 20, 1950, Domenick Falconi gave the First National Bank in Cecil his check dated September 19, 1950 for $ 9265.70, which the Cecil Bank included in their remittance letter on September 20, 1950. This check of Domenick Falconi's was drawn on the First National Bank in Canonsburg, was payable to Joe Minehart, and was credited to Domenick's account. Therefore, the $ 9265.70 check was used to cover the $ 4700 Lentre Rosconi check. What Mr. Falconi received for the difference between $ 4700 and $ 9265.70, there is no record of.
'On September 22, 1950, when the Domenick Falconi check for $ 9265.70 arrived at the First National Bank in Canonsburg, there were not enough funds to cover, therefore Domenick Falconi made a deposit of $ 9279.43 to cover this check. The deposit totalling $ 9279.43 consisted of $ 65 currency, an item of $ 14.43, an item of $ 1800, and an item of $ 7400. The last two items are the checks drawn on the First National Bank at Cecil as follows: one, $ 1800 check dated September 20, 1950 drawn by John F. Wagner, and is part of this suit; 2, the $ 7400 check dated 9-21-50 was drawn by the P. & J. Coal Mining Company payable to Domenick Falconi and is a part of this suit.
'From this, we traced the two checks, the $ 1800 check and the $ 7400 check back, and it was used in part to take up the $ 4700 Lentre Rosconi check. Mr. Falconi admits it was for his benefit.
'Q. Now in your opinion then, and from your investigation, is it your opinion that the Cecil Bank or the F.D.I.C. was unjustly enriched as a result of Mr. Falconi's paying these two checks at the Cannonsburg Bank? A. No.
'Q. And in your opinion was Mr. Falconi unjustly deprived of the money with which he paid for these two checks? A. No.
'Q. Why not? A. Because you trace them right back to that $ 4700 check. Now as I stated before, I don't know what the difference is between the $ 4700 and the check that was given; that I can't explain, but $ 4700 of it definitely is.'
From what has been said, the query is: Was there an issue of fact for the jury to resolve? This court concludes that there was not. Defendant's evidence makes it crystal clear that the checks sued on were part and parcel of the kite, plaintiff's protestations to the contrary notwithstanding. Jacobsen's conclusions are backed by the hard and carefully sifted and examined impartial records of the banks through which the subject checks circulated. Those records show a continuous check kite until the suicide of Wagner. Kiting checks is an illegal transaction in violation of the banking laws. 18 U.S.C.A. § 656. See United States v. Matsinger, 3 Cir., 191 F.2d 1014.
Returning to the defendant's first proposition, Has the plaintiff established that Cecil Bank was unjustly enriched at the expense of the plaintiff? The overwhelming evidence requires that the answer be in the negative. Wagner provided plaintiff with a false credit. When plaintiff was required to make good the three checks at the Canonsburg Bank after Wagner's suicide, he was simply paying for the credit illegally extended to him by Wagner. It is true that plaintiff offered Angelo Falconi, his nephew, to testify that in exchange for the $ 10,000 cashier's check, he gave Wagner $ 10,000 in cash. As with plaintiff's oral testimony, this testimony of Angelo Falconi simply cannot stand in the face of the documentary proof. His statement with regard to the cashier's check is simply imaginary or else perjurious.
For instance, plaintiff's main contention is that the check of September 21, 1950 in the sum of $ 10,000 signed by him, on which the Cecil Bank was payee and which Wagner put through, and for which the Cecil Bank was given credit by the Federal Reserve Bank, was unauthorized dipping into his account by his friend Wagner for the benefit of the bank. The documentary proof, however, is inconsistent and to the contrary. It must be emphasized that plaintiff used many names in the check kite transactions. The checks which floated between the two banks after the cashier's check of September 13, 1950 was given to Angelo Falconi, were purportedly signed, the first by Cesare Falconi and the second by Phillip Falconi. The check mentioned by Wagner at the September 19 conference, dated September 21, 1950, reimbursed the Cecil Bank for Angelo's cashier's check. Both Wagner and Falconi knew this was a 'phoney' check and to make it good at the Canonsburg Bank on which it was drawn, Wagner instructed plaintiff to deposit the P. & J. Coal Mining Company check in the sum of $ 10,000. Thus, when plaintiff walked out of the Cecil Bank on September 19, 1950 with the three checks, Exhibits 8, 9 and 10, given to him by Wagner for deposit at the Canonsburg Bank, he was still carrying out a check kite. The P. & J. Coal Mining Company check in the sum of $ 10,000 was in fact deposited by plaintiff at the Canonsburg Bank on September 25, 1950, the other two having been deposited on September 22, in accordance with Wagner's instructions to plaintiff. Thus, the final step and the end of the kite occurred on September 25 at the Canonsburg Bank. Plaintiff's and Angelo Falconi's unsupported assertions cannot prevail over the documentary proof. See Sachs v. Ohio Nat. Life Ins. Co., 7 Cir., 148 F.2d 128, at page 131, 158 A.L.R. 688.
To discuss Angelo Falconi's testimony further, if he had given Wagner $ 10,000 in cash, then there was no need whatsoever for the remaining $ 10,000 checks shown by the uncontradicted records which were kept in due course by various banks. It is most significant that three names of plaintiff's family were used, that is, Angelo, Cesare and Phillip Falconi, in the several floats which were put out to cover the cashier's check. Again, if Wagner had received $ 10,000 in cash, then plaintiff knew he was embezzling the money and in that event he was particeps criminis to the embezzlement and cannot use the cashier's check as the basis for recovery against the defendant.
Plaintiff having engaged in a criminal venture with Wagner, he is entitled to no relief in this court. The general proposition is that the courts leave ill-doers where they find them. As early as 1818, in the case of Seidenbender v. Charles, 4 Serg. & R., Pa., 151, Chief Justice Tilghman of Pennsylvania said:
'* * * I consider it a perfectly settled proposition that an action cannot be sustained, founded on a transaction prohibited by Statute, although it be not expressly declared that the contract is void.'
And, in McMullen v. Hoffman, 174 U.S. 639, at page 654, 19 S. Ct. 839, at page 845, 43 L. Ed. 1117, the court said:
'The authorities from the earliest time to the present unanimously hold that no court will lend its assistance in any way towards carrying out the terms of an illegal contract. In case any action is brought in which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it, nor will they enforce any alleged rights directly springing from such contract. In cases of this kind the maxim is, 'Potior est conditio defendentis."
The law is settled that neither an illegal contract nor any other transaction arising from illegality can be the basis of a successful cause of action. The law turns a deaf ear to a litigant founding his claim for relief upon an act which the law has condemned as being unlawful. Numerous cases can be cited in support of the foregoing proposition. See Sepeise v. McCoy, 6 Watts & S., Pa., 485; Dippel v. Brunozzi, 365 Pa. 264, 74 A.2d 112; McMullen v. Hoffman, supra; Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 54 S. Ct. 146, 78 L. Ed. 293; Warner Bros. Theaters v. Cooper Foundation, 10 Cir., 189 F.2d 825; and Restatement of the Law, Restitution, Chap. 8, Sec. 140.
As to defendant's second and third questions mentioned heretofore, it is apparent that no further discussion is needed. Wagner was a conceded embezzler. He was engaged in unlawful acts. With Wagner, plaintiff had kited hundreds of checks. Plaintiff must be held to have dealt with John F. Wagner individually, and the record is bare of any evidence that Wagner's unlawful acts in the matters here involved were within his real or apparent authority as an employee or officer of the Cecil Bank. Federal Deposit Ins. Corp. v. Pendleton, D.C., 29 F.Supp. 779.
Motion for a New Trial
Consideration should be given to the motion for a new trial in the event that judgment n.o.v. does not prevail. It is my view as trial judge, that the verdict is against the weight of the credible evidence and that a grave injustice has been done the defendant by the jury's verdict. As mentioned heretofore, the testimony of Angelo Falconi as to the $ 10,000 in cash is against the overwhelming weight of the evidence.
Another point is appropriate to mention in the event of a new trial. The pretrial conference was held on January 29, 1957. At that time the decision of the Court of Appeals of this circuit, Masters v. Commissioner, had not been decided. See 243 F.2d 335. George R. Craig, Esq., representing defendant, mentioned plaintiff's pleas of nolle contendere and sentence on two indictments, Nos. 13753 and 13754, in this court. The one charged Falconi with violation of 18 U.S.C. § 1341, using the mails in the execution of a scheme to defraud, and the other charged Falconi with misapplying moneys, funds and credits of a national bank, 18 U.S.C. § 656. Both indictments, the second one especially, relate to the check kite engaged in by plaintiff with Wagner at this same bank. When Mr. Craig suggested that convictions might be used in the trial of the case for the purpose of affecting plaintiff's credibility in the event he testified, Mr. Zeman and the court indicated that such proof was inadmissible because the plea was nolle contendere. This was error in the light of the Masters case and of itself is no doubt sufficient to require a new trial.
One further comment suggests itself as appropriate. How did it happen that the jury failed to accept what has been characterized in this discussion as crystal clear evidence? No doubt one reason was the fact that the evidence as to the check kite which was introduced by the defendant was most complicated and difficult for a jury to follow and understand. In reading the trial record one is struck by the fact that plaintiff and Wagner were most adept at covering one 'phoney' check with another. Such evidence is hard to make clear to the lay mind. Most likely, also, the fact that Mr. Jacobsen had twice recommended payment to plaintiff had a strong influence on the jury's finding for plaintiff. Plaintiff's counsel is a most persuasive trial lawyer and he made the most of the two recommendations. Nevertheless, the trial record requires a new trial in the event that the judgment n.o.v. does not prevail.
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