People v. Clayton, 84SA530

• Decision Date: 02 December 1986
• Docket Number: No. 84SA530,84SA530
• Parties: The PEOPLE of the State of Colorado, Plaintiff-Appellant, v. Charles Arthur CLAYTON, Defendant-Appellee.
• Court: Colorado Supreme Court

Page 723

728 P.2d 723

The PEOPLE of the State of Colorado, Plaintiff-Appellant, v. Charles Arthur CLAYTON, Defendant-Appellee.

No. 84SA530.

Supreme Court of Colorado,

En Banc.

Dec. 2, 1986.

Rehearing Denied Dec. 22, 1986.

Barney Iuppa, Dist. Atty., Fourth Judicial Dist. and David H. Zook, Chief Deputy Dist. Atty., Colorado Springs, for plaintiff-appellant.

David F. Vela, State Public Defender and Peggy O'Leary, Deputy State Public Defender, Denver, for defendant-appellee.

DUBOFSKY, Justice.

The People appeal the El Paso County district court's dismissal of one count of felony theft filed against the defendant Charles Arthur Clayton. The district court ruled that theft as defined by statute or under the common law does not include a partner's unauthorized taking of partnership property. We affirm the ruling of the district court.

I.

In November 1979, Clayton and his wife Marvolene formed a partnership called Clayton Realty Company with Thomas and Donna Lee Gray. The Grays assumed a $40,000 debt and contributed an additional $20,000 in return for a 50 per cent share of the partnership. On February 13, 1981, the defendant and his wife entered into a partnership agreement with Evan C. Jones and his wife Consuelo R. Jones to form ERA Clayton Realty. Ten days later, on February 23, 1981 the Claytons and Grays dissolved the first partnership. The purpose of both partnerships was to conduct general real estate business.

As part of the dissolution of the first partnership the defendant agreed to pay the Grays $300 a month for ten years. He made five payments to the Grays, totalling $1500, from ERA Clayton Realty's partnership account. The ERA Clayton Realty partnership agreement states in relevant part:

ARTICLE X.

PARTNERS' POWERS AND LIMITATIONS

1. Checks shall be drawn on the partnership bank account for partnership purposes only and all checks shall be signed by any one of the partners or as may be agreed upon from time to time.

* * *

3. Each partner shall pay his separate debts punctually and shall indemnify the other partners and the capital and property of the partnership against the same and all expenses on account thereof. ¹

On August 2, 1984, the defendant was charged with felony theft under section 18-4-401, 8B C.R.S. (1986), which provides:

(1) A person commits theft when he knowingly obtains or exercises control over anything of value of another without authorization, or by threat or deception, and:

(a) Intends to deprive the other person permanently of the use or benefit of the thing of value; or

(b) Knowingly uses, conceals, or abandons the thing of value in such manner as to deprive the other person permanently of its use or benefit; or

(c) Uses, conceals, or abandons the thing of value intending that such use, concealment, or abandonment will deprive the other person permanently of its use and benefit; ...

After a preliminary hearing, the district court found that the defendant paid a personal debt to his former partners using funds from the ERA Clayton Realty partnership account. The court ruled, however, that a partner cannot be charged with theft of partnership property under section 18-4-401 or the Uniform Partnership Law (UPL), sections 7-60-101, et seq., 3A C.R.S. (1986) because partnership property is not a thing of value of another. The court dismissed the charge against the defendant. The People seek reinstatement of the charge, claiming that an unauthorized taking of partnership property by one of the partners constitutes theft.

II.

The common law rule is that a partner cannot be guilty of embezzlement or larceny of partnership property. 68 C.J.S. Partnership § 88; 50 Am.Jur.2d Larceny § 84; see generally Embezzlement or Larceny by a Partner, 82 A.L.R.3d 822 § 3 (1978); Larceny by a Partner, 169 A.L.R. 372 (1946). Jurisdictions in which partners have been found guilty of larceny or embezzlement from a partnership have statutory authority for the departure from common law. State v. Siers, 197 Neb. 51, 248 N.W.2d 1 (1976) (language added to state uniform partnership act and Nebraska embezzlement statute allowed partner to be charged with theft of partnership property); State v. Sasso, 20 N.J.Super. 158, 89 A.2d 489 (1952) (New Jersey statute made it a misdemeanor for agent to take property or "any part thereof" belonging to principal); People v. Sobiek, 30 Cal.App.3d 458, 106 Cal.Rptr. 519 (1973) (state embezzlement statute required property stolen be that of "another" but did not require property to be that of "another" for offense of fraudulently appropriating property entrusted for use of another); State v. Matthews, 129 Ind. 281, 28 N.E. 703 (1891) (surviving partner held partnership assets as fiduciary and not as owner under statute subjecting to prosecution for embezzlement one acting in fiduciary capacity who fails to turn over or account for property when legally required to do so).

Colorado law is consistent with the common law. Under both the common law and the UPL, partners are joint owners of property. Roberts v. Roberts, 118 Colo. 524, 198 P.2d 453 (1948); § 7-60-106(1), 3A C.R.S. (1986). Section 18-4-401(1) provides that "[a] person commits theft when he knowingly obtains or exercises control over anything of value of another without authorization, or by threat or deception, ..." (Emphasis added.) Interpreting the language of the theft statute in People v. McCain, 191 Colo. 229, 552 P.2d 20, 22 (1976), this court refused to find a person who absconded with assets owned jointly with a church, guilty of theft:

We note by way of analogy the general principle that in the absence of statute a co-owner of property cannot ordinarily be guilty of theft and, further, that joint owners, or tenants in common, cannot steal from each other, and members of a voluntary association having an interest in its funds cannot commit larceny of such funds.

See also Ferme Rimouski, Inc. v. Limousin West, Inc., 620 F.Supp. 552, 555 (D.Colo.1985); People v. Johnson, 618 P.2d 262, 266 (Colo.1980); People v. Zimbelman, 194 Colo. 384, 572 P.2d 830 (1977); Hucal v. People, 176 Colo. 529, 493 P.2d 23 (1971); Kelley v. People, 157 Colo. 417, 402 P.2d 934 (1965); Sparr v. People, 122 Colo. 35, 219 P.2d 317 (1950); People v. Schlicht, 709 P.2d 94 (Colo.App.1985).

The People urge that the definition of "property of another" under Colorado's arson statute, sections 18-4-101, 18-4-102 and 18-4-103, 8B C.R.S. (1986), as interpreted in People ex rel. Van Meveren v. District Court, 619 P.2d 494 (Colo.1980), be applied to the theft statute. Section 18-4-101 provides:

(3) Property is that of "another" if anyone other than the defendant has a possessory or proprietary interest therein.

Under common law, possession or occupancy, not ownership, was relevant to the crime of arson. Van Meveren, 619 P.2d at 496. In Van Meveren, this court held that the statutory definition of "property of another" altered the common law and that a credit union's security interest in the motor home that was destroyed by fire was a sufficient proprietary interest to subject the defendant to prosecution for arson. In contrast, the theft statute under which the defendant was prosecuted refers not to the taking of property but to the taking of "anything of value of another." The word "property" is not used in section 18-4-401. It is difficult to say that the General Assembly altered the common law crime of theft when the definition of property relied on in Van Meveren cannot be applied to section 18-4-401. ²

The People also assert that the defendant in the instant case can be subject to prosecution for theft because the UPL, section 7-60-125, 3A C.R.S. (1986), provides that

(1) A partner is coowner with his partners of specific partnership property holding as a tenant in partnership.

(2) the incidents of tenancy in partnership are such that:

(a) A partner, subject to the provisions of this article and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; but he has no right to possess such property for any other purpose without the consent of his partners; ...

This section requires a partner to use partnership property for partnership purposes, but it does not, by itself, create or define a crime.

It is far from clear that the General Assembly intended for the wrongful taking of partnership property to be theft under section 18-4-401. Criminal statutes are to be strictly construed in favor of the accused in order to give all persons fair notice of what constitutes a criminal act. United States v. Shoels, 685 F.2d 379 (10th Cir.1982), cert. denied, 462 U.S. 1134, 103 S.Ct. 3117, 77 L.Ed.2d 1370; People v. Hrapski, 658 P.2d 1367 (Colo.1983); People v. Home Insurance Co., 197 Colo. 260, 591 P.2d 1036 (1979). In addition, criminal statutes cannot be extended either by implication or construction. People v. Home Ins. Co., 591 P.2d 1036. We conclude that, without specific statutory authority, the unauthorized taking by a partner of partnership assets is not a crime.

Other factors indicate a need for caution in extending criminal liability to partnership disputes. The misuse of partnership money, in this case to pay a debt to a former partner, is the type of partnership dispute commonly seen in civil courts. The defendant argues that Article X, Section 3 of the ERA Clayton Realty partnership agreement implies that the partners anticipated that separate debts of individual partners might be paid out of partnership funds because it requires prompt repayment and indemnification of the other partners and the partnership. Interpretation of the partnership agreement is best left to a civil court or to arbitration, as required by the partnership agreement. If a civil court finds that the $1500 payment constituted a misuse of partnership funds, the aggrieved partners have adequate remedies under the UPL.

We affirm the ruling of the district...