McElroy v. State
| Decision Date | 23 January 1984 |
| Docket Number | No. 05-83-00036-CR,05-83-00036-CR |
| Citation | 667 S.W.2d 856 |
| Parties | Mark T. McELROY, Appellant, v. The STATE of Texas, Appellee. |
| Court | Texas Court of Appeals |
Randy Taylor, Dallas, J. Thomas Sullivan, Santa Fe, N.M., for appellant.
Henry Wade, Dist. Atty., Karen Chilton Beverly, Asst. Dist. Atty., for appellee.
Before the court en banc.
This appeal is from a conviction for the misapplication of construction trust funds having a value of $250 or more, a felony proscribed by TEX.REV.CIV.STAT.ANN. art. 5472e (Vernon Supp. 1982-1983). In two of appellant's nine grounds of error, 1 he claims that the State produced insufficient evidence to prove that he misapplied or diverted the construction funds with intent to defraud or to prove that the expenditures were not "reasonable overhead ... directly related to such construction project." After careful review of the record we agree that the State neither proved the requisite intent nor negated the
exception which permits the use of the funds for reasonable overhead. Accordingly, we reverse and remand with instructions to enter an order of acquittal.
The record reflects that appellant contracted with Mr. and Mrs. Cox to add an additional room and a patio to their residence. The contract, dated September 28, 1978, called for a price of $17,437 and completion within eighty-three days. Following a twenty-five percent down payment, the Coxes were supposed to--and did--make payment as work progressed on the following schedule:
Work Completed Amount Date Paid
-------------- ------- ---------
Frame 25% $4,359. Nov. 26
Roof 25% $4,359. Dec. 6
Brick 15% $2,016. Jan. 18
Completion 10% $1,743. --
Five days after execution of the contract, appellant put five or six employees to work on the foundation. The foundation was completed at the end of October. On November 26 Mrs. Cox made the first progress payment after the frame was up. After appellant finished the roof during the first part of December, Mrs. Cox wrote him a check for the next installment. Appellant took some time off from the project over the holidays but returned to continue work in January. The record shows that Mrs. Cox made the next progress payment on January 18, 1979. Mrs. Cox testified that soon after the January payment, appellant took his men off her project to work on another one. Coker, a carpenter, testified that March 22 or 23 was the last day on the job.
The State relied on four dishonored payroll checks written on March 16 and 23 to establish the date on or about which the offense occurred. The three workers who were payees on these checks were also working on a church for appellant around the same time. It is unclear from the record whether the dishonored checks were payment solely for work on the Coxes' house.
The State introduced numerous checks drawn on two of appellant's business checking accounts to establish that appellant used the funds for purposes other than labor, materials, or reasonable overhead expense in connection with the Cox project. Balance statements on two of appellant's three accounts for the duration of the project were also introduced in evidence. The State showed that one of these accounts had a negative balance at the end of September 1978 and, after deposit of the initial payment from the Coxes on September 29, 1978, certain checks and bank charges were paid from the account. However, the State did not show the balance of the payroll account when the project began. The State did not trace the source of funds from this project to uses other than the Cox project. Additionally, the State did not show that all deposits in the business accounts came from the Coxes. For example, the State did not show the source of an October 20 deposit of $6,058 to one account. The record reflects that this deposit could not have come out of the payments from the Coxes. Thus the State did not show that these were construction funds. The State's evidence of diversion of the construction funds consists of checks such as the following:
PAYEES
Nov. 2 Marsha McElroy $1,000
Nov. 13 Chivas Square
Apartments 300 (N.S.F.)
Nov. 17 Mark McElroy 175 (N.S.F.)
Nov. 29 Mark McElroy 175 (N.S.F.)
Dec. 7 B & B Liquor
(Cashier's
check) 1,006.64
Dec. 10 Chivas Square
Apartments 300
Dec. 15 Mark McElroy 225
Dec. 18 First National
Bank 544.82
Jan. 19 General
Telephone 228.13
Jan. 26 Mark McElroy 100
Mar. 7 General
Telephone 118.74 (N.S.F.)
Appellant testified that he made many of his business payments with cash. The record reflects that appellant surely made some payments with cash because numerous materials were purchased which were not paid for by check. The State introduced these checks in evidence by the testimony
of bank officers who testified that these were true records of the banks. However, the State did not show the purpose or disposition of the proceeds of the checks that it claimed to be diversions or misapplications of funds. For example, appellant testified that he delivered the $1,006 cashier's check to B & B Liquor on December 7 to cover his company's payroll checks cashed at that store. The State did not bring in the payees of this or any of the other checks to show what was done with the proceeds of these checks.
Appellant contends that the evidence is insufficient in two respects: (1) It fails to show that he misapplied or diverted any funds with intent to defraud; and (2) it fails to negate that the disbursements the State relied upon were reasonable overhead of the project. First we address the evidence offered to prove culpable mental state. The pertinent portions of article 5472e provide as follows:
Construction payments and loan receipts declared trust funds
1. All moneys or funds paid to a contractor or subcontractor ... under a construction contract for the improvement of specific real property in this state ... which are secured ... by a lien on the specific property to be improved are hereby declared to be Trust Funds for the benefit of ... mechanics ... or materialmen who may ... furnish labor or material ...; provided, however, that moneys paid to a contractor or subcontractor ... may be used to pay reasonable overhead ... directly related to such construction contract. ...
Wrongful disbursement, use or retention of trust funds
2. Any Trustee, who shall, directly or indirectly, with intent to defraud, retain, use, disburse, misapply, or otherwise divert, any trust funds, or part thereof, as defined in Section 1 of this Act, without first fully paying and satisfying all obligations of the Trustee to all artisans, laborers, mechanics, contractors, subcontractors, or materialmen, incurred or to be incurred in connection with the construction and improvements, for which said funds were received, shall be deemed to have misapplied said Trust Funds.... Misapplication of Trust Funds ... of the value of $250 or over shall be punished by confinement in the Department of Corrections for a period not exceeding ten years.
TEX.REV.CIV.STAT.ANN. art. 5472e, §§ 1, 2 (Vernon Supp. 1982-1983) (emphasis added). The State contends that the "record reflects that the [a]ppellant used the Coxes' money for expenses other than those which arose from the construction project." Although the State correctly concedes that it has the burden of proving a misapplication under the statute, we disagree with the conclusion that it met that burden. Under this statute the State must prove intent to defraud in the accused's payments for purposes other than the construction project and its related expenses.
When "intent to defraud is the gist of the offense, the State must prove facts from which such an intent is deducible beyond a reasonable doubt and, in the absence of such proof, a conviction will not be justified." Stuebgen v. State, 547 S.W.2d 29, 32 (Tex.Cr.App.1977). For example, in Knapp v. State, 504 S.W.2d 421 (Tex.Cr.App.1974) (), the court noted that the mere showing of a taking of $1,200 of stamps would have been insufficient to show "intent to deprive the [State] of the value" of the stamps and to appropriate them to the accused's own use. In Knapp the State showed other evidence of intent, namely, that the accused exchanged the same amount and type of stamps for a pickup truck. Id. at 437. Similarly, in the case at bar, the State did not prove that appellant gave the proceeds of the checks to a person other than one who was authorized to receive those proceeds. For example, the State could have attempted to prove its allegation that appellant wrongfully disbursed $1,006 to the B & B Liquor store by showing what items, if any, appellant purchased at the store. Furthermore, the State did not The Court of Criminal Appeals in Stuebgen gave some guidance as to how an offense requiring intent to defraud fits into the scheme of culpable mental states in TEX.PENAL CODE ANN. § 6.03 (Vernon 1974). In a forgery case, under Stuebgen, the State must prove that the accused knew the instrument was forged to show intent to defraud. Hence, intent to defraud offenses fall under the intentional or knowing culpable mental state categories. See Stuebgen, 547 S.W.2d at 32. Intent to defraud may be shown by circumstantial evidence.
show that the $1,006 cashier's check payable to B & B Liquor came out of the construction funds.
Here, to circumstantially prove intent to defraud, the State relies upon various checks made out to payees other than subcontractors or materialmen. However, the checks were insufficient proof of intent to defraud because the State did not prove that the payees of these checks received the proceeds of the checks and that they did not merely cash appellant's...
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