People v. Skelly

CURTIS, J. Appellants were found guilty after a trial by court, without a jury, of seventeen counts of grand theft, the total amount of the thefts charged aggregating about $39,000. The two appellants are brothers who, at the time of the alleged offenses, were officers of a corporation known as “Douglas L. Skelly Company, Inc.”, which company had been licensed by the corporation department of the state of California to do business as a stock broker. Douglas L. Skelly owned practically the entire stock of the company and was undoubtedly the one who had the controlling direction of the [284]company.. Robert B. Skelly, his younger brother, owned one share of stock in the company, and was a director, the treasurer, and trading manager of -the company. This appeal is from the order denying the motion for a new trial and from the judgment of conviction.

The conviction of the appellants is predicated primarily, and almost solely, upon the testimony of the complaining witness, Charles T. Davis. This testimony is to the effect that on March 14, 1932, he deposited with the Douglas L. Skelly Company, Inc., hereinafter referred to as the “Skelly Company”, securities consisting of stocks and bonds of the value of $190,000. He testified that he had been unable to secure a loan from a bank and that he approached Douglas L.. Skelly with the proposition that Skelly Company should procure the loan through their connections with a bank using his securities as collateral security for a loan up to $125,000, and that Douglas L. Skelly accepted the proposal, and through this arrangement he procured immediately from Skelly Company an advance of $65,000. He testified that he gave to Skelly Company three demand notes aggregating $65,000 at 6 per cent interest. He emphatically declared that it was his understanding that his securities were to be pledged with the Security First National Bank of Los Angeles, and that the amount advanced to him was advanced solely as a loan, and emphatically denied that in making this arrangement with Skelly Company, through Douglas L. Skelly, he had opened any margin account with said company. In January, 1933, so he testified, he discovered for the first time that his securities had not been deposited with the Security First National Bank, but had been rehypothecated by Skelly Company with Russell Miller & Company, stock brokers, with whom Skelly Company maintained a correspondent margin account, and that certain securities, covered by the indictment, had been sold by said Russell Miller & Company without his knowledge or consent by order of Skelly Company, and the proceeds thereof credited to Skelly Company’s account with Russell Miller & Company. It also appears that some of his securities had been sold through another firm, and that the money had never been credited to his account.