State v. Blaisdell, 76-227-CR

• Decision Date: 03 October 1978
• Docket Number: No. 76-227-CR,76-227-CR
• Citation: 85 Wis.2d 172,270 N.W.2d 69
• Parties: STATE of Wisconsin, Respondent, v. Terry BLAISDELL, William Utech, d/b/a Lloyd Electric Service, Inc., Appellants.
• Court: Wisconsin Supreme Court

Page 69

270 N.W.2d 69

85 Wis.2d 172

STATE of Wisconsin, Respondent, v. Terry BLAISDELL, William Utech, d/b/a Lloyd Electric

Service, Inc., Appellants.

No. 76-227-CR.

Supreme Court of Wisconsin.

Argued Sept. 7, 1978.

Decided Oct. 3, 1978.

Appeal from judgments and orders of the circuit court of Milwaukee County: ROBERT W. LANDRY, Circuit Judge. AFFIRMED.

Howard B. Schoenfeld, Milwaukee (argued), for appellants; Peregrine, Marcuvitz, Cameron & Peltin, S. C., Milwaukee, on briefs.

Marguerite M. Moeller, Asst. Atty. Gen. (argued), for respondent; Bronson C. La Follette, Atty. Gen., on brief.

DAY, Justice.

This is an appeal from judgments convicting the appellants, Terry Blaisdell and William Utech, (hereafter defendants, doing business as Lloyd Electric Service, Inc., of theft by subcontractor, party to a crime, in violation of secs. 289.02(5), 943.20(1)(b) and (3)(c) and 939.05, Stats. and to review orders denying defendants' motions for a directed verdict of dismissal and acquittal and for judgment notwithstanding the jury verdict or, in the alternative, for a new trial.

The question is whether there was sufficient credible evidence for the jury to convict the defendants of theft by subcontractor beyond a reasonable doubt. We conclude that there was.

The defendants, Terry Blaisdell and William Utech were the principal officers of Lloyd Electric Service, Inc., an electrical contracting company. Mr. Blaisdell was president and Mr. Utech was secretary of the corporation. On November 20, 1973, Douglas Dynamics Corporation, as owner, contracted with Megal Construction Corporation as general contractor to construct an addition to the owner's property in the city of Milwaukee. Megal fulfilled its obligations as general contractor and was paid in full for its work. Megal in turn contracted with Lloyd Electric to do the electrical work on this particular project. The contract price was $22,896 which was paid by Megal to the defendants in eight installments beginning in April 1974 and ending August 20, 1974.

Standard Lamp furnished the electrical supplies to Lloyd Electric for the Douglas Dynamics project starting March 18, 1974 through June 4, 1974. The defendants owed Standard Lamp $3,092.01 for materials supplied for that particular project. Standard Lamp was never paid for the Douglas Dynamics project, according to the president of Standard Lamp, who testified on behalf of the state. He testified that Standard Lamp and Lloyd Electric had been doing business with each other since 1969 and that Lloyd Electric began to fall behind in paying its bills as of November, 1973. The deficit continued through November, 1974 when Lloyd Electric went into receivership. The delinquent balances grew larger during 1975 so that the defendants owed more to Standard Lamp at the end of the Douglas Dynamics project than they did at the beginning of the project. The president of Standard Lamp testified that Lloyd Electric had two types of accounts with Standard Lamp. One was a general running account and the other was a special account for a project in Oconomowoc known as the Scotsland project. The Scotsland project was broken down into a number of smaller jobs.

All undesignated payments made to Standard Lamp by Lloyd Electric were credited to the regular open account and were used to pay off the oldest invoices first. According to the president of Standard Lamp the defendants could direct that payments be applied to specific jobs and they were aware that they could do so. In some cases, the defendants did, in fact, designate that payment be made to a specified account. The testimony was to the effect that it was up to the defendants to designate to which account a particular payment was to be applied and that in the absence of such designation any money paid was merely applied to the oldest outstanding account.

During August and September of 1974, Lloyd Electric paid Standard Lamp checks totaling $18,000, none of which was designated for a specific account. On October 1, 1974, Lloyd Electric gave Standard Lamp a check for $274.81, designated as payment on the Inland Diesel job. On October 23, 1974, Lloyd Electric gave a check for $3,000 to Standard Lamp designated for the Northridge account. This was the last payment which Lloyd Electric made to Standard Lamp.

The defendants were convicted in a jury trial of violating sec. 289.02(5), Stats. (1973). ¹ The defendants were each fined $5,000.

Under sec. 289.02(5), Stats. all monies paid by an owner to a contractor or subcontractor become a trust fund until all claims by suppliers of labor and materials used in the improvements have been paid. Violation of the statute is punishable under sec. 943.20(1)(b), Stats. (1973) ² as theft by a trustee. To sustain a conviction under sec. 289.02(5), Stats. the state must prove beyond a reasonable doubt that the defendants intended to defraud just as it would in a prosecution for theft. Pauly v. Keebler, 175 Wis. 428, 436, 185 N.W. 554 (1921).

Citing State v. Halverson, 32 Wis.2d 503, 509, 145 N.W.2d 739 (1966) and Wis. J.I. Criminal sec. 1444 Theft by Employee, Trustee, or Bailee (Embezzlement), the defendants summarize the four elements of the crime as (1) that the defendant by virtue of his office as trustee had possession, or custody of money of another obtained because of his office, business or employment; (2) that the defendant intentionally used, concealed or retained possession of such property without the owner's consent and contrary to the defendant's authority; (3) that the defendant knew that such concealment or such retention of such money was without the owner's consent and contrary to the defendant's authority; and, (4) that the defendant retained possession of such money with intent to convert it for his own use.

The defendants do not contest the sufficiency of the evidence to prove the first element of the offense. The evidence introduced at trial clearly shows that Douglas Dynamics contracted with Megal Construction Company to build an addition to the Douglas Dynamics plant, that Megal was paid in full and that Megal in turn paid Lloyd Electric in full as a subcontractor. Nor is it contested that Lloyd Electric was furnished electrical supplies and material for that job by Standard Lamp.

The defendants' argument is that the evidence is insufficient to prove the second element of the offense, i. e. that the defendants intentionally retained the funds entrusted to them. Their argument is that the state was obliged to prove beyond a reasonable doubt that the defendants retained the funds paid to them for the Douglas Dynamics project for purposes other than payment to Standard Lamp.

The state's position is that it was obliged to prove only that the defendants intentionally used the funds it received from Megal for purposes other than payment to Standard Lamp for the supplies Standard Lamp furnished for use on the Douglas Dynamics project.

Standard Lamp was entitled to receive $3,092.01 from the defendants for furnishing the electrical supplies the defendants used in the Douglas Dynamics project. The defendants argue that because they paid Standard Lamp $18,000 during the months of August and September, 1974, the funds received from Megal were used for their intended purpose, that is, payment to Standard Lamp. The state correctly argues however, that Megal certainly did not intend that the defendants pay these funds to Standard Lamp for supplies which that company might have furnished on other construction projects. It is the state's position that had Lloyd Electric paid the funds it received from Megal to other electrical supply companies for items furnished on earlier projects, the defendants would be in no position to argue that the funds had been expended for their intended purpose.

Under the statutes here in question, the state's position is the correct one. In the case of Bastian v. LeRoy, 20 Wis.2d 470, 483, 122 N.W.2d 386, 393 (1963), we held that the trust fund created by sec. 289.02(4), Stats. (now renumbered 289.02(5), Stats.) arises "when the money has been paid by the owner or mortgagee to the contractor for improving the owner's property." We must look to the money paid by the owner to do the particular job and trace the use of those proceeds. Until all claims for labor and materials are paid, the contractor's interest in the money paid to him by the owner to the extent of the amount of all claims due and to become due for that project is merely as a trustee.

This view was expressed in a study of this provision in 1967 when the Legislature revised the construction lien laws. The study memorandum commented, "If a contractor is building several houses and uses a progress payment on the most recent one to pay off the subs on a previous one, that is larceny." Memorandum by Walter Raushenbush to the Insurance and Banking Committee of the Wisconsin Legislative Council on Possible Revision of Construction Lien Laws, Wisconsin Statutes, sec. 289.01 sec. 289.15, October 4, 1966.

In Burmeister Woodwork Co. v. Friedel, 65 Wis.2d 293, 222 N.W.2d 647 (1974), the plaintiff...