Commonwealth v. Moreton

On a citizen complaint charging the defendant with larceny by check and larceny over $250, a judge of the Orleans District Court found the defendant not guilty of the check charge and guilty of the larceny. The defendant was placed on one year’s administrative probation, and was ordered to pay restitution in the amount of $2,915.89. The property alleged to have been stolen was the proceeds from the sale of a blue fin tuna, delivered to the defendant for sale in Japan. On appeal, the defendant claims his motion for a required finding of not guilty, Mass.R.Crim.P. 25(a), 378 Mass. 896 (1979), filed at the close of the Commonwealth’s case and renewed at the close of all the evidence, should have been allowed because the Commonwealth failed to prove the requisite criminal intent. We agree.

*216Facts. The Commonwealth put on its case through the complaining witness, Henry Souza, a commercial fisherman and captain of a whale watching boat. Taking Souza’s testimony in the light most favorable to the Commonwealth, Commonwealth v. Cordle, 412 Mass. 172, 175 (1992), the facts of the Commonwealth’s case were as follows.

On October 1, 1996, Souza caught a 386 pound blue fin tuna in the waters off Cape Cod. At the dock, Souza showed the fish to buyers from three different companies. He testified that he chose Gulfstream Seafood, Inc. (Gulfstream, of which the defendant was the owner and president), because “Mr. More-ton’s company told me that I could be paid within a week. The other two couldn’t give me a date; and that was the main reason I sold to Mr. Moreton’s company.” A little over a week later, Souza learned that the tuna had been sold at auction on October 5, and that his share of the proceeds was $2,915.89.

In the succeeding weeks, Souza repeatedly called the defendant and the Gulfstream employee who had represented the company on the dock, demanding his money. On at least one occasion, the employee told Souza the defendant was in Japan. On November 14, Souza spoke to the defendant on the telephone. The defendant agreed to send Souza a check immediately. Upon receiving the check, Souza telephoned the bank to ask whether there were sufficient funds to cover the check. There were not. Souza then called the defendant again, who told him to hold the check for a few more days. Several days later, Souza called the bank again, but there were still insufficient funds to cover the check. Souza testified that he was “in contact with the bank manager. She called [the defendant], and they . . . seemed to work something out. She told [Souza] to try again in a couple of days; that she was sure it would be resolved.” It was not resolved. When Souza called the defendant again, the defendant said that “if [Souza] pursued it anymore, if [he] tried to deposit [the check] or take any kind of legal action against [the defendant], [the defendant] was going to file bankruptcy.”

Around December 11, Souza deposited the check anyway in order to have a record that there were insufficient funds. The check was returned. Souza called the defendant but the defendant did not return Souza’s calls. About a week later, Souza received a “bankruptcy notice.” He filed a claim in the subsequent Gulfstream bankruptcy proceedings.

*217Some months later, on March 20, 1997, Souza filed an application for a criminal complaint against the defendant in the Orleans District Court in two counts: larceny by check and “embezzlement larceny.” Following a hearing on May 27, 1997, the court issued a two-count complaint on June 2, 1997.

The case was tried jury-waived on September 3, 1997, in the Orleans District Court. At the conclusion of the Commonwealth’s case, the defendant moved for a required finding of not guilty. The motion was denied. The defendant renewed the motion at the conclusion of all the evidence. At that point, the judge concluded that “the goods were placed in consignment in the first place . . . [and that] by failing to turn over Henry’s share of the money [after the auction] the Defendant committed a larceny.” The judge found the defendant guilty of the larceny and not guilty of the larceny by check.

Discussion. Our standard of review on a motion for a required finding of not guilty is, considering the evidence in the light most favorable to the Commonwealth, “whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Commonwealth v. Cordle, 412 Mass. at 175. A conviction may rest entirely upon circumstantial evidence, but no essential element may rest on surmise, conjecture or guesswork. Commonwealth v. Donovan, 395 Mass. 20, 25 (1985).

Souza’s application for the criminal complaint set out a count for “embezzlement larceny,” and the case appears to have been tried on this theory. See Commonwealth v. Nadal-Ginard, 42 Mass. App. Ct. 1, 5 n.6 (1997) (despite merger of all types of larceny in a single statute, separate crimes survive). To convict the defendant of embezzlement, the Commonwealth must prove that the defendant “unlawfully, and with intent to steal or embezzle, converged] ... the property [of Souza].” G. L. c. 266, § 30(1). “ ' [T]heft by embezzlement must be an intentional and fraudulent appropriation’ and ... for conviction ‘it must be beyond a reasonable doubt that the [defendant had a criminal intent to defraud.’ ” Commonwealth v. Carson, 349 Mass. 430, 437 (1965). See Model Jury Instructions for Use in the District Court, Instruction 5.415 (1997). See also Perkins, Criminal Law 852 (3d ed. 1982) (in order to constitute larceny, there must be “wilful misuse of another’s property . . . with an additional design in mind . . . [the] intent to steal”).

In cases in which the inference of an intent to steal or defraud *218is warranted, there is some evidence of an affirmative effort to mislead the owner of the property. See, e.g., Commonwealth v. O’Connell, 274 Mass. 315, 321 (1931) (inference of intent to deprive permanently warranted where administrator of estate violated court order as to use of estate’s funds); Commonwealth v. Hull, 296 Mass. 327, 330 (1937) (defendant “put [customer] off” with a false statement that he could not get delivery of bonds, whereas he had intentionally used proceeds intended to purchase bonds to cover his own business expenses); Commonwealth v. Anthony, 306 Mass. 470, 475 (1940) (intentionally false material representations as to financial condition of brokerage firm). There was no such evidence here. At best the evidence shows that the defendant accepted delivery of Souza’s tuna, agreed to pay the proceeds to Souza within a week of selling the fish, did not pay Souza on the promised date or in the weeks thereafter, and then declared bankruptcy without having paid Souza. There is simply no direct or circumstantial evidence of criminal intent. The defendant’s motion for a required finding therefore should have been allowed. Commonwealth v. Latimore, 378 Mass. 671, 677-678 (1979) (“[T]o sustain the denial of a directed verdict, it is not enough for the appellate court to find that there was some record evidence, however slight, to support each essential element of the offense; it must find that there was enough evidence that could have satisfied a rational trier of fact of each such element beyond a reasonable doubt”). The analysis of the dissent relies heavily on the characterization of the transaction here as a consignment. However, in our view the parties’ description of the transaction as a consignment does not materially change the analysis. There still must be evidence of criminal intent to support a conviction of larceny.

Moreover, it is not clear that the agreement here was actually a consignment. The invoice, which is included in the record appendix but may or may not have been introduced in evidence, is a six by eight and one-half inch form with the weight of the tuna and the word consignment written on it. It is dubious whether the word consignment on the invoice is sufficient to establish the transaction as a consignment, without any evidence of the understanding of the parties as to the details of the arrangement. See Sturm v. Boker, 150 U.S. 312, 326-327 (1893) (terms of the agreement, not invoice, establish nature of transaction). Here there is no evidence of any agreement about price, share of profits, treatment of proceeds, or responsibility for *219disposal of the fish if it were not sold. Contrast Deyrmanjian v. Palais, 311 Mass. 553, 554 (1942) (consignment contract addressed specific responsibilities of parties). Indeed, Souza acknowledged substantial ignorance about the details of the transaction into which he had entered, including where the fish would be sold, who would buy the fish, how the fish would be shipped, and how the shipper would be paid. Nor was there evidence of any agreement that the proceeds of the auction sale of this particular tuna would be segregated from the proceeds of other such sales. See Hawkland, Consignment Selling Under the Uniform Commercial Code, 67 Com. L.J. 146, 147 (1962) (notwithstanding description of agreement as consignment, arrangement treated as “sale, conditional sale or chattel mortgage” where agreement failed to specify segregation of goods or proceeds).

The mere failure to make good on a commercial transaction, whether a consignment or a transaction by another name, particularly in the context of a bankruptcy, does not establish the criminal intent required for an embezzlement conviction. See In re Phillips, 882 F.2d 302, 305 (8th Cir. 1989) (no malice where “no evidence that [debtors’ decision to use funds in their account to repay other creditors and not claimant] was based upon anything other than an attempt to keep [company] going as a viable business entity . . . capable of repaying [claimant]”); In re Littleton, 942 F.2d 551, 554-555 (9th Cir. 1991) (no malice where debtors breached security agreement, but sought additional financing and acted with good faith hope and expectation of keeping the business solvent).

At most, the evidence here supports an action for breach of contract, or perhaps an action in tort for conversion, presumably one of many possible such cases against the defendant, given the state of his bank account and his company’s declaration of bankruptcy. There was no evidence that the defendant took the fish under false pretenses intending to retain the proceeds, or that he decided to keep the proceeds at some later time. In fact there was no evidence at all regarding the disposition of the proceeds. The mere failure to pay within seven days in these circumstances is not sufficient to support an inference of larcenous intent.

Finding criminal liability on these facts is inconsistent with the longstanding policy objectives of the Bankruptcy Act — to give the debtor a structured opportunity to resolve his debts and *220make a fresh start, and to ensure equality of asset distribution among creditors. See Crandall, The Law of Debtors and Creditors par. 10.02[2], [3] (rev. ed. 1991). Souza had an option under bankruptcy law to avoid lining up with the defendant’s other creditors. He could have filed a complaint in the bankruptcy court for a determination under the civil preponderance of the evidence standard that the defendant’s debt to him was nondischargeable on the grounds that the defendant embezzled the proceeds, 11 U.S.C. § 523(a)(4), see In re Phillips, 882 F.2d at 303, or converted them wilfully and maliciously. 11 U.S.C. § 523(a)(6). See In re Littleton, 942 F.2d at 554.

Instead, Souza insisted not only on the proceeds but on punishment. Rather than providing a “sanctuary from the jungle of creditors’ pursuit of their individualistic collection efforts,” Appendix B Collier, Bankruptcy 4-318 (15th ed. rev. 1999) (legislative history, commission report), conviction on these facts ensures that the defendant will bear the stigma of a felony conviction along with the hardship of bankruptcy. It will also burden transactions of the sort at issue here to the ultimate disadvantage of all the parties.

Judgment reversed.

Finding set aside.

Judgment for the defendant.