People v. Sobiek

• Decision Date: 08 February 1973
• Docket Number: Cr. 10649
• Citation: 30 Cal.App.3d 458,106 Cal.Rptr. 519
• Court: California Court of Appeals Court of Appeals
• Parties: , 82 A.L.R.3d 804 The PEOPLE of the State of California, Plaintiff and Appellant, v. Charles SOBIEK, Defendant and Respondent.

Page 519

106 Cal.Rptr. 519

30 Cal.App.3d 458, 82 A.L.R.3d 804

The PEOPLE of the State of California, Plaintiff and Appellant, v. Charles SOBIEK, Defendant and Respondent.

Cr. 10649.

Court of Appeal, First District, Division 4, California.

Feb. 8, 1973.

Hearing Denied April 4, 1973.

Evelle J. Younger, Atty. Gen., State of California, Edward A. Hinz, Jr., Chief Asst. Atty. Gen., William E. James, Asst. Atty. Gen., Robert R. Granucci, W. Eric Collins, April P. Kestell, Deputy Attys. Gen., San Francisco, for plaintiff and appellant.

Goth, Dennis & Aaron, and James M. Dennis, Redwood City, for defendant and respondent.

BRAY, Associate Justice. ^*

Appellant appeals from order of the San Mateo County Superior Court granting respondent's motion to quash counts One, Two, Three and Four of an indictment.

Questions Presented

1. May a partner be guilty of embezzling or stealing partnership property? Yes.

2. Was respondent denied a speedy trial? No.

3. Ruling that a partner may be guilty of grand theft is not violative of article I, section 9, United States Constitution, or of article I, section 16, California Constitution.

By an indictment filed in the San Mateo County Superior Court respondent was indicted for four counts of violation of Penal Code section 487 (grand theft) and one count of violation of Penal Code section 470 (forgery). He moved to quash the indictment. After a hearing, the court granted his motion as to the four counts of grand theft and denied it as to the forgery charge. The People appeal.

The charges arise out of a situation in San Mateo County where a group of 15 friends organized the Empire Investment Club whose purpose was to invest money in second mortgages. Respondent, an insurance and real estate field representative, was elected president. Each member originally invested $100 and paid into the club's fund $25 per month thereafter.

It is unnecessary to detail the various acts of respondent in gradually assuming practically unlimited control of the making of loans and in finally appropriating to his own use considerable sums of the group's money. The evidence on the hearing of the motion under Penal Code section 995 to set aside the indictment clearly and amply shows reasonable cause fory holding respondent to answer on all the charges unless, as contended by respondent and found by the court, section 487 cannot apply to a member of a group such as this on the theory that a partner may not steal nor embezzle the property of his partnership.

1. Does section 487 apply? ¹

In People v. Brody (1938) 29 Cal.App.2d 6, 83 P.2d 952, the defendant and his friends contributed money for the purpose of operating bingo games. A partnership was formed for profit-making purposes and an agreement executed. The defendant used some of the funds for his own purposes and was charged with grand theft. The court held (p. 10, 83 P.2d p. 953): 'The evidence is, as defendant claims, insufficient In law to sustain the judgment. Viewed as a charge of embezzlement the uncontradicted evidence showed that the defendant and his associates were partners. However, it is settled law that a general partner cannot be convicted of embezzling partnership property which comes into his possession or under his control during the course of the partnership business by reason of his being a partner. (People v. Hotz, 85 Cal.App. 450, 259 P. 506; People v. Foss, 7 Cal.2d 669, 62 P.2d 372.)' (Emphasis added.)

It will be noted that the court in Brody based its statement that 'it is settled law' that a partner could not be convicted of embezzling partnership property on reference to People v. Hotz (1927) 85 Cal.App. 450, 259 P. 506, and to People v. Foss (1936) 7 Cal.2d 669, 62 P.2d 372. In Hotz the court stated that this rule is 'well established,' relying on Ex parte Sanders (1921) 23 Ariz. 20, 201 P. 93, 17 A.L.R. 980, and annotations, 982. Sanders was interpreting an Arizona statute. The Sanders court stated that embezzlement was purely a statutory offense unknown to the common law and that to determine whether a partner could be convicted for misappropriating funds belonging to the partnership, it was necessary to look to the statute defining the crime. (23 Ariz. 22.) The court in Sanders refused to follow State v. Kusnick (1888) 45 Ohio St. 535, 15 N.E. 481, which held that an owner of shares in a joint-stock banking company, who was also cashier, could be guilty of embezzlement, on the grounds that the Ohio statute on which that decision was based did not contain the requirement that the property be 'of another.' Instead, the court followed the case of State v. Reddick (1891) 2 S.D. 124, 48 N.W. 846, which interpreted a statute similar to Arizona's. This statute listed the categories of persons who could be guilty of embezzlement and specifically omitted the category 'partners,' thus, reasoned the South Dakota court, showing a legislative intent that partners not be subject to this crime.

The California theft statute, Penal Code section 484, contains the requirement that for a felonious stealing the personal property shall be 'of another' but does not contain this requirement for the offense of fraudulently appropriating property which has been entrusted to a defendant. Moreover, there is no listing of the categories of persons who can be guilty of the crime. The statement contained in People v. Hotz, Supra, 85 Cal.App. 450, 259 P. 506, is not required by the wording of the California statute and indeed the conspicuous omission of the requirement that the property entrusted to the one who fraudulently appropriates it be 'of another' in our California statute would seem to require that the state follow the Kusnick rule rather than the Sanders rule.

Penal Code section 506 lists the categories of persons who can be guilty of embezzlement and does not include partners. However, a partner would be included in the category 'person otherwise intrusted with or having in his control property for the use of any other person, . . .' This does not require that the property be that of another person but that it be entrusted for the use of another. This would include partnership property entrusted to a partner.

The basic thought behind the decisions sustaining the rule that a partner may not steal partnership property seems to be that as each partner is the ultimate owner of an undivided interest in all the partnership property and as no one can be guilty of stealing or embezzling what belongs to him, a general partner cannot be convicted of embezzling partnership property, i.e., the property must be 'of another.' This rule, when thus broadly stated, goes further than the simple statutory requirement that the property be 'of another.' When thus stated, the rule requires that the property be wholly that of another because a part interest by the defendant prevents a conviction. This interpretation extends 'of another' to read 'wholly of another.' Because the California statute, though requiring that the property be 'of another' for larceny, does not require that the property be 'of another' for embezzlement, it is totally inappropriate to adopt a judicial rule requiring that the embezzled property be wholly of another.

The rule has been the subject of much criticism and even disparagement. In People v. Hotz, Supra, 85 Cal.App. 450, 259 P. 506, despite stating the Sanders rule, the court affirmed the conviction by finding that the arrangement between the defendant and his victim to share both profits and losses from the sale of automobiles was not in fact a partnership, commenting that the essential distinguishing feature of a co-partnership 'is the association for the 'purpose of carrying on (the) business together (citations), and the agreement to divide profits is not sufficient.' (85 Cal.App. at p. 453, 259 P. at p. 507.)

People v. Foss, Supra, 7 Cal.2d 669, 62 P.2d 372, the other authority relied upon in Hotz, cited no authority for its statement that the rule was well settled and, moreover, as the court upheld the conviction, finding that there was no partnership nor was the defendant a partner, the statement is dicta. Likewise, in People v. Pond (1955) 44 Cal.2d 665, 672, 284 P.2d 793, the rule is stated as dictum as a partnership was not involved. Inasmuch as the statement in these California Supreme Court cases that a partner could not be convicted of embezzling from a partnership is dicta, we are not required to adhere to such statement. (People v. Gregg (1970) 5 Cal.App.3d 502, 506, 85 Cal.Rptr. 273.)

People v. Brody, Supra, 29 Cal.App.2d 6, 83 P.2d 952, basing its decision on the dicta in People v. Hotz, Supra, and People v. Foss, Supra, held that the defendant could not be guilty of embezzling from his partners. The court referred to In re Severin (1922) 188 Cal. 348, 205 P. 101, where the petitioner obtained money from the complaining witness upon the representation that he had formed a partnership to carry on a certain business and for that money would admit the witness as a member. The court, without any explanation for its reason for so holding, held that this did not establish the petitioner's guilt of embezzlement but that there was probable cause to believe the petitioner guilty of either of three distinct crimes: (1) larceny by trick and device, (2) embezzlement of money obtained by trick and device, or (3) obtaining money by false pretenses. The case is hardly a precedent to apply in the case at bench.

In People v. Jones (1950) 36 Cal.2d 373, 224 P.2d 353, the defendant relied upon People v. Cravens (1947) 79 Cal.App.2d 658, 180 P.2d 453, for the proposition that procuring money to be contributed to the capital of a partnership of which the victim is a member cannot constitute the crime of obtaining money by false pretenses because the victim, as a partner, retains an interest in the fund. (36 Cal.2d at p. 379, 224 P.2d 353.) The court held that the defendant, having perpetrated a fraud through the...