State v. Blunt

• Citation: 2008 ND 135,751 N.W.2d 692
• Decision Date: 30 June 2008
• Docket Number: No. 20070247.,20070247.
• Parties: STATE of North Dakota, Plaintiff and Appellant v. Charles BLUNT, Defendant and Appellee.
• Court: United States State Supreme Court of North Dakota

751 N.W.2d 692

2008 ND 135

STATE of North Dakota, Plaintiff and Appellant v. Charles BLUNT, Defendant and Appellee.

No. 20070247.

Supreme Court of North Dakota.

June 30, 2008.

Cynthia Mae Feland (argued), Assistant State's Attorney, and Lloyd Clayton Suhr (appeared), Assistant State's Attorney, Bismarck, N.D., for plaintiff and appellant.

Michael Ray Hoffman, Bismarck, N.D., for defendant and appellee.

SANDSTROM, Justice.

[¶ 1] The State appealed from a district court order dismissing a criminal complaint charging Charles Blunt with two counts of misapplication of entrusted property. We reverse and remand, concluding (1) personal gain to the defendant is not an element of the crime of misapplication of entrusted property, and (2) the district court erred in concluding there was not probable cause to believe that an offense had been committed or that Blunt had committed it.

I

[¶ 2] Blunt was the Executive Director and CEO of Workforce Safety & Insurance ("WSI") from 2004 to 2007. In 2006, the State Auditor's Office conducted a performance review of WSI. The Auditor's report "identified expenditures appearing to result in noncompliance with constitutional provisions, state law, and OMB policy" totaling more than $18,000. Among the alleged improper expenditures noted in the Auditor's report were gift certificates to restaurants, gas stations, shopping malls, and movie theaters given to certain WSI employees; food, beverages, flowers, balloons, decorations, costume rentals, ornaments, and gifts for WSI meetings; costs of paying for legislators to attend insurance conventions; costs of a luncheon for a legislative committee to present WSI's proposed legislative bills for 2005; and bonuses paid to three high-ranking WSI executives.

[¶ 3] As a result of the Auditor's report, Blunt was charged with two counts of misapplication of entrusted property in violation of N.D.C.C. § 12.1-23-07(1). Count I charged Blunt with a class B felony for misapplying over $10,000 in WSI funds for gift certificates, meeting expenses, and expenditures on legislators. See N.D.C.C. § 12.1-23-07(2)(a). Count II charged Blunt with a class C felony for misapplying over $500 in WSI funds for improper bonuses to three high-ranking WSI executives. See N.D.C.C. § 12.1-23-07(2)(b). Following a preliminary hearing and submission of post-hearing briefs, the district court concluded the State had failed to establish probable cause that an offense had been committed or that Blunt had committed it. An order dismissing the criminal complaint was entered, and the State appealed.

[¶ 4] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06(1). This Court has jurisdiction under N.D. Const. art. VI, § 6, and N.D.C.C. § 29-28-07(1). See State v. Baumgartner, 2001 ND 202, ¶ 6, 637 N.W.2d 14 (an order dismissing a criminal complaint is the equivalent of an order quashing an information or indictment and is appealable under N.D.C.C. § 29-28-07(1)); State v. Serr, 1998 ND 66, ¶¶ 4, 7, 575 N.W.2d 896 (same). The appeal was timely under N.D.R.App.P. 4(b)(1)(B).

II

[¶ 5] The State contends the district court erroneously engrafted an additional element onto the offense of misapplication of entrusted funds when it based its dismissal of the complaint on the State's failure to show that Blunt personally benefitted from any unauthorized expenditure of public funds.

[¶ 6] Misapplication of entrusted property is prohibited by N.D.C.C. § 12.1-23-07(1):

A person is guilty of misapplication of entrusted property if the person disposes of, uses, or transfers any interest in property that has been entrusted to the person as a fiduciary, or in the person's capacity as a public servant or an officer, director, agent, employee of, or a person controlling a financial institution, in a manner that the person knows is not authorized and that the person knows to involve a risk of loss or detriment to the owner of the property or to the government or other person for whose benefit the property was entrusted.

[¶ 7] This Court has identified the elements of the offense as: (1) the disposal, use, or transfer; (2) of any interest in property; (3) which has been entrusted to the defendant; (4) as a fiduciary or in his capacity as a public servant; (5) in a manner he knows is not authorized; (6) and that he knows to involve a risk of loss or detriment to; (7) the owner of the property or the government. State v. Barendt, 2007 ND 164, ¶ 10, 740 N.W.2d 87; State v. Jelliff, 251 N.W.2d 1, 7 (N.D.1977). Neither the language of N.D.C.C. § 12.1-23-07 nor the legislative histories of the statute or the provision of the Proposed Federal Criminal Code from which it was adopted indicate the State is required to show that the defendant personally benefitted from misuse of the property. See National Commission on Reform of Federal Criminal Laws, Final Report § 1737 (Misapplication of Entrusted Property) (1971); II Working Papers of the National Commission on Reform of Federal Criminal Laws 974-75 (July 1970).

[¶ 8] The district court based its conclusion that the State was required to show Blunt personally benefitted from the unauthorized expenditures upon the fact that the defendant in Jelliff had personally benefitted from the misapplication of entrusted property:

In Jelliff the state's attorney had personally taken funds for himself. Indeed, the Court is not aware of any case in North Dakota involving misapplication of public funds by a government employee or officer in which the defendant or the defendant's family did not benefit from such misapplication of funds, although it is conceivable some such person could develop a "Robin Hood" personality, but the Court is not aware of any such North Dakota case. The state's argument in this case has to be that Blunt gave away funds he was entrusted to manage as there is no evidence he used any of the funds for himself, although he could easily have had a cup of coffee or slice of cake at one of the events which led to these charges.

The district court concluded that "[w]ithout any evidence of self dealing in these public funds, there is no evidence that Blunt knew these meeting expenses and `bonuses' `involve a risk of loss or detriment ... to the government.'"

[¶ 9] The court essentially engrafted an additional element onto the offense of misapplication of entrusted property that is not included in the statute. The language of the statute, the legislative history, and our case law do not support the district court's conclusion. The focus and purpose of the statute is protection of the owner's interest in the entrusted property, not whether the defendant received a personal benefit from misuse of the property. In short, "[a] public officer entrusted with public funds has no right to give them away." 63C Am.Jur.2d Public Officers and Employees § 265 (1997); see also Teigen v. State, 2008 ND 88, ¶ 35, 749 N.W.2d 505 (Sandstrom, J., concurring specially) (N.D. Const. art. X, § 18, "restrain[s] ... government actors from gifting public funds or property").

[¶ 10] We conclude the district court erred when it based its dismissal of the complaint upon lack of evidence that Blunt personally benefitted from the alleged unauthorized expenditures of public funds.

III

[¶ 11] Blunt contends that even if the district court based its determination that the State had failed to establish probable cause upon its erroneous inclusion of an additional element in the offense, dismissal of the complaint was still appropriate. Blunt contends the court made findings of fact on other elements of the offense that support the court's conclusion there was not probable cause. Blunt argues the court's findings show the State failed to prove Blunt knew that the expenditures were unauthorized or that they involved a risk of loss or detriment to the government.

A

[¶ 12] To some extent, the court's reasoning and analysis, and Blunt's arguments on appeal, are premised upon an apparent misconception of the purpose and scope of a preliminary hearing.

[¶ 13] Preliminary hearings are governed by N.D.R.Crim.P. 5.1:

(a) Probable Cause Finding. If the magistrate finds probable cause to believe an offense has been committed and the defendant committed the offense, an arraignment must be scheduled. The finding of probable cause may be based on hearsay evidence in whole or in part. The defendant may cross-examine adverse witnesses and may introduce evidence. The magistrate may receive evidence that would be inadmissible at the trial.

(b) Discharge of the Defendant. If the magistrate hears evidence on behalf of the respective parties in a preliminary examination, and finds either a public offense has not been committed or there is not sufficient cause to believe the defendant guilty of the offense, the magistrate must discharge the defendant.

[¶ 14] This Court has said that in determining whether probable cause exists, the district court may judge credibility and make findings of fact. State v. Foley, 2000 ND 91, ¶ 10, 610 N.W.2d 49; State v. Serr, 1998 ND 66, ¶ 9, 575 N.W.2d 896. On appeal, we will not reverse the district court's findings of fact in preliminary proceedings in a criminal case if, after resolving conflicts in the evidence in favor of affirmance, sufficient competent evidence exists that is fairly capable of supporting the court's findings and the decision is not contrary to the manifest weight of the evidence. Foley, at ¶ 8; Serr, at ¶ 9. Whether the facts found by the district court reach the level of probable cause is a question of law, fully reviewable on appeal. Heick v. Erickson, 2001 ND 200, ¶ 10, 636 N.W.2d 913; Foley, at ¶ 8; Serr, at ¶ 9.

[¶ 15] The district court's authority to assess credibility and make findings of fact must be viewed, however, in the context of the minimal burden of proof placed upon the State and the limited purpose of the preliminary hearing. The State is not required to prove with...