State v. WeaverState v. Weaver
The dispositive issue presented for review on direct appeal is whether the lawful possession or control element of the crime of embezzlement was satisfied when an administrative employee took a corporate signature stamp without permission and wrote unauthorized corporate checks, thereby misappropriating funds from her employer. That employee’s misappropriation is the basis of defendant’s convictions for aiding and abetting embezzlement and conspiracy to embezzle. We conclude that the employee did not lawfully possess or control the misappropriated funds and therefore affirm the decision of the Court of Appeals which reversed defendant’s convictions.
On 6 August 2001, defendant was charged pursuant to N.C.G.S. § 14-90 with two counts of aiding and abetting his wife, Kimberly
Upon entry of judgment, defendant gave notice of appeal in open court. On 21 October 2003, a divided panel of the Court of Appeals reversed defendant’s convictions on all counts.
State v. Weaver,
FACTUAL BACKGROUND
The record reflects that several members of the Weaver family are involved in this factually complex case. Defendant’s parents started R&D, a plastic injection molding corporation, in 1979. Defendant’s father, Robert Dennis Weaver, Sr. (Dennis Weaver), was R&D’s sole owner and CEO, while defendant’s mother, Shirley Weaver, served as R&D’s secretary-treasurer. In 1997 and 1998, defendant was employed at R&D as the plant manager and all R&D employees reported to him, with the exception of his parents and one other individual.
In 1996, defendant, his father Dennis Weaver, and two other individuals acquired International Color, a color compounding plant for plastic material. International Color was then relocated near the R&D site and treated by the Weavers as an extension of R&D.
Defendant married Kimberly Weaver, who was employed as a receptionist at R&D in 1986. In 1997 and 1998, when the misappropriation occurred, Kimberly Weaver was an employee of both R&D and International Color and was being trained by Shirley Weaver to become the accounting manager. Kimberly Weaver’s duties at R&D included entering payables, making bank deposits, and entering data. Kimberly Weaver also “ran” the International Color office.
With respect to her duties, responsibilities, and authority at R&D, Kimberly Weaver testified:
Normally I would write a check if we had a COD delivery come in. Or if we had something that we had to go pick up and we needed to pay for, I would call Shirley and ask her if it was all right if I ran a check, and she would authorize it, and I would run the check and use her stamp.
Both Shirley and Kimberly Weaver testified at defendant’s trial that Kimberly had no authority to sign R&D or International Color checks. Kimberly Weaver testified that in order to write a check from either company’s account she “had to have direct permission from either Shirley, and if Shirley was not available, Dennis Weaver.” Shirley Weaver further testified that, except on a case-by-case basis, Kimberly did not have the authority to use the signature stamp, which was kept in a desk drawer in Shirley’s office.
During 1997 and 1998, Kimberly Weaver and defendant were experiencing personal financial' difficulty. According to Kimberly Weaver, defendant began directing her to misappropriate R&D funds to solve their financial problems. At defendant’s trial, Kimberly Weaver testified:
[Defendant] came to me and said, “Let’s” — There was something that needed to be done or he wanted done on the home, and the credit cards were to their maximum limit, and we did not have the funds to do whichever, I can’t remember specifically, and he told me to borrow the money from R&D Plastics. And when I questioned him how, he said, “Well, just go upstairs and take the stamp out of Mom’sdrawer and just stamp the check and put it into Technicraft.”
From January of 1997 through May of 1998, Kimberly Weaver misappropriated over $450,000 from R&D and International Color. She accomplished this by using counter checks, checks earmarked for shredding because they listed R&D’s address incorrectly, or legitimate corporate checks. Kimberly Weaver would write the checks and then stamp them with Shirley Weaver’s signature. According to Kimberly Weaver, the misappropriated funds were used by defendant or herself for various personal expenses, including credit card bills, household expenses such as electricity bills, season tickets to Alabama football games, hunting dog purchases and training, hunting and deep-sea fishing trips, various home improvements and landscaping, home furnishings and appliances, family vacations, and expenses incurred in buying or showing horses.
Kimberly Weaver testified at trial that defendant manipulated inventory records in an effort to cloak her activities. She further concealed her illegal activity by under-reporting deposits in company records, thereby misrepresenting R&D’s actual cash inflow. Additionally, Kimberly Weaver wrote unauthorized checks from International Color to R&D to “make up a deficit in the deposit versus the checks that Shirley had run so we would not be overdrawn on the bank account.”
It is undisputed that Kimberly Weaver also used a third company, Technicraft, Inc. (Technicraft), as a vehicle to conceal the misappropriation of R&D and International Color funds. Defendant founded Technicraft in 1996 to complete secondary work on plastic parts. Technicraft was physically located at the R&D plant site; however, its corporate records were kept on a computer at the home of defendant and Kimberly Weaver.
With respect to the discovery of Kimberly Weaver’s illegal activities, Shirley Weaver testified that although she paid the company bills, Kimberly balanced the checkbook each month. Thus, Shirley Weaver testified:
[As I started to pay the bills for the last pr]obably nine months, I knew that we had a problem with money. ... We were making a good profit and should have had the cash there to pay the bills, and every week when I started to pay bills, the money wasn’t there, it just wasn’t there. And every week Kim would come up with a deposit that just didn’t get recorded so that I could make the bills, but we still didn’t have the money.
Shirley Weaver also testified that in December 1997 or January 1998, she and two R&D employees examined the company records to “make sure that Kim and [defendant] were not double or triple billing for the Technicraft things.”
Shirley and Dennis Weaver first identified the breadth of accounting irregularities created by Kimberly Weaver on 29 May 1998. On that day, Shirley Weaver was notified that eleven International Color checks had been returned by the bank, stamped non-sufficient funds. When Shirley Weaver questioned Kimberly Weaver about the checks, Kimberly became hysterical and left the International Color business office. Kimberly Weaver testified that she was so distraught that she later attempted suicide.
On 6 August 2001, a Buncombe County grand jury indicted defendant for two counts of aiding and abetting Kimberly Weaver to embezzle funds from International Color, nineteen counts of aiding and abetting Kimberly Weaver to embezzle funds from R&D, and a single count of conspiracy to commit embezzlement from International Color and R&D. Defendant was arraigned on 10 September 2001 and entered not guilty pleas to each charge. The record on appeal suggests that Kimberly Weaver was similarly charged or was expected to be similarly charged; however, at defendant’s trial Kimberly Weaver testified that she had no pending plea bargain with the District Attorney’s Office in return for her cooperation and testimony. On 4 December 2001, a Buncombe County jury returned a verdict finding defendant guilty on all counts.
This Court must now determine whether the funds Kimberly Weaver misappropriated from R&D and International Color were in her lawful possession or under her care and control such that defend
ant’s convictions of
HISTORY AND ELEMENTS OF THE LAW OF EMBEZZLEMENT
The crime of embezzlement developed as, and continues to be, an important statutory counterpart to the common law crime of larceny. At common law, if an employee acquired his employer’s property by trespass, meaning that the employee took the property against his employer’s will with the intent to steal it, the employee was guilty of larceny, a felony.
1
2 Joel Prentiss Bishop,
New Commentaries on The Criminal Law Upon a New System of Legal Exposition
§§ 799, 803 (Chicago, T.H. Flood & Co., 8th ed. 1892) [hereinafter 2 Bishop,
New Commentaries
(1892)];
see also
2 William Oldnall Russell,
A Treatise on Crimes and Indictable Misdemeanors
102 (Philadelphia, P.H. Nicklin & T. Johnson, 3d ed. 1836) [hereinafter 2 Russell,
Treatise on Crimes].
If an employee lawfully came into possession of his employer’s property during the course of employment, but later took that property for his own personal benefit, the employee was guilty of the common law offense of breach of trust, a misdemeanor.
2
2 Bishop,
New Commentaries
§§ 799, 803 (1892);
see also State v. Braden,
The first “modern” embezzlement statute was enacted in England by Parliament in 1799. An Act to protect masters against embezzlements by their clerks or servants, 1799, 39 Geo. 3, c. 85 (Eng.);
see also
Hall,
Theft
38-39. The purpose of the Act was to ensure uniform results in similar cases by extending the common law of larceny to most circumstances in which the defendant initially came to possess the stolen property without trespass. Wm. L. Clark, Jr.,
In post-colonial North Carolina, the new state’s common law and statutory traditions can be traced to its origin in English law. Because North Carolina’s legal system was still in its infancy when North Carolina became the twelfth state on 21 November 1789, it is not surprising that the British common law crime of larceny and statutory crime of embezzlement were discussed by this Court in one of its first reported decisions,
State v. Higgins,
As North Carolina’s legal system matured, the first statute criminalizing embezzlement was enacted during the 1871-1872 session of the General Assembly. That legislation, titled “An Act to Define and Punish the Crime of Embezzlement,” stated:
If any officer, agent, clerk or servant of any corporation, or any clerk, agent or servant of any person or co-partnership, (except apprentices and other persons under the age of sixteen years,) shall embezzle or fraudulently convert to his own use or shall take, make away with or secrete, with intent to embezzle or fraudulently convert to his own use any money, goods, or other chattels, bank note, check or order for the payment of money . . . which shall have come into his possession or under his care by virtue of such office or employment, he shall be deemed guilty of felony, and upon conviction thereof, shall be punished as in cases of larceny.
Act of Feb. 8, 1872, ch. 145, 1871-72 N.C. Sess. Laws 223, 223-24 (emphasis added).
Minor substantive revisions to the statute have been made over the last 130 years, most notably those expanding the class of individuals who are capable of committing the offense of embezzlement. Act of Feb. 25, 1889, ch. 226, 1889 N.C. Sess. Laws 237 (adding consignees); Act of Feb. 28, 1891, ch. 188, 1891 N.C. Sess. Laws 164 (including “public officer[s], clerkfs] of the superior or other court,
sheriffs] or other person[s] or officers] exercising a public trust or holding public office”); Act of Feb. 6, 1897, ch. 31, 1897 N.C. Sess. Laws 83 (extending the statute to guardians, administrators, and executors who misappropriate funds); Act of Mar. 21, 1931, ch. 158, 1931 N.C. Sess. Laws 221 (further extending the statute to trustees who embezzle from their beneficiaries); Act of Jan. 24, 1939, ch. 1, 1939 N.C. Sess. Laws 25 (incorporating any receiver and any other fiduciary under the statutory scheme); Act of Feb. 17, 1941, ch. 31, 1941 N.C. Sess. Laws 41 (adding bailees to the list of individuals subject to the statute); Act of June 20, 1967, ch. 819, 1967 N.C. Sess. Laws 1044 (broadening the statutory scope to cover embezzlement from any unincorporated association or organization);
As a result, N.C.G.S. § 14-90, the current statute defining embezzlement, now states:
If any person exercising a public trust or holding a public office, or any guardian, administrator, executor, trustee, or any receiver, or any other fiduciary, or any officer or agent of a corporation, or any agent, consignee, clerk, bailee or servant, except persons under the age of 16 years, of any person, shall embezzle or fraudulently or knowingly and willfully misapply or convert to his own use, or shall take, make away with or secrete, with intent to embezzle or fraudulently or knowingly and willfully misapply or convert to his own use any money, goods or other chattels, bank note, check or order for the payment of money . . . belonging to any other person or corporation, unincorporated association or organization which shall have come into his possession or under his care, he shall be guilty of a felony.
N.C.G.S. § 14-90 (2003) (emphasis added).
Over the past century, this Court has examined embezzlement and its place in our jurisprudence on several occasions. For example, in a 1903 decision, this Court noted that the general aim of embezzle
ment statutes in both England and North Carolina “was to
punish the misappropriation of property rightfully in the possession of the alleged wrongdoer,
who, though civilly liable for a conversion, could riot be convicted of larceny, because there was no taking from the owner’s possession by an act of trespass.”
State v. McDonald,
More recently in
State v. Griffin,
While there is similarity in some respects between larceny and embezzlement, they are distinct offenses. Larceny is a common law offense not defined by statute; while embezzlement is a criminal offense created by statute to cover fraudulent acts which did not contain all the elements of larceny.
Generally speaking, to constitute larceny there must be a wrongful taking and carrying away of the personal property of another without his consent, and this must be done with felonious intent .... The embezzlement statute makes criminal the fraudulent conversion of personal property by one occupying some position of trust or some fiduciary relationship as specified in the statute. The person accused must have been entrusted with and received into his possession lawfully the personal property of another, and thereafter with felonious intent must have fraudulently converted the property to his own use. Trespass is not a necessary element. In embezzlement the possession of the property is acquired lawfully by virtue of the fiduciary relationship and thereafter the felonious intent and fraudulent conversion enter in to make the act of appropriation a crime (citations omitted). 4
Historically, since the General Assembly codified the criminal offense of embezzlement in North Carolina, the criminal act has hinged on a defendant’s misappropriation of property in his/her lawful possession or care due to employment or fiduciary capacity. As in English common law, misappropriation by trespass supports the offense of larceny, not embezzlement, in North Carolina.
Griffin,
APPLICATION OF THE LAW OF EMBEZZLEMENT TO THE PRESENT CASE
In the instant case, it is undisputed that Kimberly Weaver had no independent authority to write checks from R&D accounts or to use Shirley Weaver’s signature stamp. In fact, both Kimberly and Shirley Weaver testified that direct authorization from Shirley was required before Kimberly wrote each individual check. Although the record is unclear as to the exact location of each check used to misappropriate the company funds, the record indicates that the signature stamp was kept in a desk drawer in Shirley Weaver’s office and that Kimberly Weaver could not access this stamp without Shirley Weaver’s direct permission. While Kimberly Weaver had access to the checks and signature stamp by virtue of her status as an employee at R&D and International Color, we cannot say, based on these facts, that Kimberly Weaver’s possession of this property was lawful nor are we persuaded that this property was under Kimberly Weaver’s care and control as required by N.C.G.S. § 14-90. Because Kimberly Weaver never lawfully “possessed” the misappropriated funds and because the funds were not “under [her] care” we conclude that Kimberly Weaver did not commit the crime of embezzlement as defined in N.C.G.S. § 14-90.
“ ‘It is a rule of universal observance in the administration of criminal law that a defendant must be convicted, if convicted at all, of the particular offense charged in the bill of indictment. The allegation and proof must correspond.’ ”
State v. Watson,
The State sets forth two main arguments in support of its position on appeal. First, the State argues that Kimberly Weaver was an agent of R&D Plastics and International Color; therefore, she gained access to the
The State primarily relies on
State v. Johnson,
Johnson has no bearing on the present case. In Johnson there was no dispute that defendant was his client’s agent for purposes of negotiating a settlement and obtaining payment in compensation for his client’s injuries. In his capacity as an attorney representing his client, defendant acquired the insurance proceeds meant for his client in a lawful manner. Thus, he was properly charged with embezzlement when he later misappropriated those funds.
In contrast, Kimberly Weaver does not meet the legal definition of an agent. Two essential elements of an agency relationship are: (1) the authority of the agent to act on behalf of the principal, and (2) the principal’s control over the agent.
Holcomb v. Colonial
Assocs.,
As stated above, it is undisputed that Kimberly Weaver did not have authority to take the signature stamp or to write any check without specific permission from Shirley Weaver. The State’s reliance on Kimberly Weaver’s ongoing training to become accounting manager and “the fact that Kimberly Weaver was her supervisor’s ‘best friend’ ” is insufficient to overcome this dispositive fact. Unlike the defendant in Johnson, Kimberly Weaver was not her employer’s agent and she never lawfully possessed the misappropriated funds, initially or otherwise. Therefore, Johnson does not support the State’s argument that Kimberly Weaver embezzled the misappropriated funds.
We now address the State’s argument to the effect that the Court of Appeals’ majority erred in “centering] on Kimberly Weaver’s check-writing authority rather than the dominion and control she had over the U.S. currency.” This argument seeks to support the elements of embezzlement which require that the person who misapplied the funds have “received,” and thus come into possession of, the employer’s property “by the terms of his employment” and “in the course of his employment.” As possession of property can be actual or constructive, the Court of Appeals’ majority considered whether possession could be supported on either theory, noting that:
The State correctly cites the rule that possession of property may be actual or constructive. However, “[although defendant’s possession of the entrusted property may be actual or constructive, even constructivepossession of property requires ‘an intent and capability to maintain control and dominion’ over it. []”
Weaver,
The State’s argument fails because it is immaterial whether Kimberly Weaver had actual or constructive possession of the misappropriated funds. Because her possession, if any, was not lawful, the crime of embezzlement has not occurred.
See Speckman,
For the foregoing reasons, we conclude that the evidence presented at trial does not support defendant’s conviction for the crime of embezzlement. Accordingly, the decision of the Court of Appeals is affirmed as to the issue on direct appeal. Defendant’s convictions for aiding and abetting embezzlement and conspiracy to embezzle are reversed.
Defendant also petitioned this Court pursuant to N.C.G.S. § 7A-32(b) for a writ of certiorari to review additional issues which were briefed and argued before the Court of Appeals but were not resolved in its opinion. We allowed certiorari on 5 February 2004; however, we now conclude that certiorari was improvidently allowed. Therefore, the decision of the Court of Appeals is affirmed.
AFFIRMED; WRIT OF CERTIORARI IMPROVIDENTLY ALLOWED.
Notes
. “A felony at common law was any crime which occasioned the forfeiture of lands and goods. This was usually accompanied by capital punishment, though not always; but, as capital punishment was usually inflicted, felonies came to include all crimes punishable by death.” Wm. L. Clark, Jr., Hand-Book of Criminal Law 40 (Francis B. Tiffany ed., 2d ed. 1902) (footnotes omitted); see also 1 Joel Prentiss Bishop, Commentaries on The Criminal Law § 615 (Boston, Little, Brown, & Co., 6th ed. 1877).
. “ ‘The word misdemeanor, in its usual acceptation, is applied to all those crimes and offences [sic] for which the law has not provided a particular name; and they may be punished, according to the degree of the offence [sic], by fine, or imprisonment, or both.’ ” Bishop, note 1, § 624 (citation omitted) (footnotes omitted).
.
See
An Act to alter certain rates of postage, and to amend, explain, and enlarge several provisions in an act made in the ninth year of the reign of Queen Anne, and in
other acts relating to the revenue of the post office, 1765, 5 Geo. 3, c. 25, § 17 (Eng.) (governing embezzlement by employees of the post office); An Act for reducing the interest upon the capital stock of the South Sea Company, from the time and upon the terms herein mentioned; and for preventing of frauds committed by the officers and servants of the said company, 1751, 24 Geo. 2, c. 11, § 3 (Eng.) (governing embezzlement by officers and servants of the South Sea Company); An Act for establishing an agreement with the governor and company of the Bank of England, for advancing the sum of one million six hundred thousand pounds, towards the supply for the service of the year one thousand seven hundred and forty two, 1742, 15 Geo. 2, c. 13, § 12 (Eng.) (governing embezzlement by officers and servants of the Bank of England); Servants [e]mbezzelling their masters’ goods to the value of forty shilling[s], or above, shall be punished as felons, 1529,
. After being charged with both larceny and embezzlement for the same transaction, the defendant in
State v. Griffin
moved that the prosecutor be required to elect the offense for which he should be tried. No election occurred, and defendant was found guilty of both offenses; however, the sentences imposed for both crimes ran concurrently, and this Court thus stated that “it would appear that the defendant has no cause for complaint that the court did not require an election.”