State v. Casey's General Stores, Inc.

• Decision Date: 25 November 1998
• Docket Number: No. 97-1123,97-1123
• Citation: 587 N.W.2d 599
• Parties: STATE of Iowa, Appellee, v. CASEY'S GENERAL STORES, INC., Appellant. State of Iowa, Appellee, v. Hy-Vee, Inc., Appellant.
• Court: Iowa Supreme Court

Page 599

587 N.W.2d 599

STATE of Iowa, Appellee, v. CASEY'S GENERAL STORES, INC., Appellant.

State of Iowa, Appellee, v. Hy-Vee, Inc., Appellant.

No. 97-1123.

Supreme Court of Iowa.

Nov. 25, 1998.

Andrew J. Bracken and Jennifer A. Benning of Ahlers, Cooney, Dorweiler, Haynie, Smith & Allbee, P.C., Des Moines, for appellant Casey's.

Kerry A. Finley and Kermit Anderson of Finley, Alt, Smith, Scharnberg, May & Craig, P.C., Des Moines, for appellant Hy-Vee.

Thomas J. Miller, Attorney General, Jean C. Pettinger, Assistant Attorney General, and Charles A. Stream, County Attorney, for appellee.

Considered by McGIVERIN, C.J., and LARSON, CARTER, SNELL, and TERNUS, JJ.

TERNUS, Justice.

This consolidated appeal involves simple misdemeanor convictions of two corporations whose employees sold alcoholic beverages to underage customers during a "sting" operation by the local police. The corporations argue they cannot be held criminally responsible for their employees' actions under the circumstances presented. We agree and so reverse their convictions and remand for dismissal of the criminal charges.

I. Background Facts and Proceedings.

The factual predicate for the charges at issue here is undisputed. Both appellants, Casey's General Stores, Inc. and Hy-Vee, Inc., operate stores in Oskaloosa, Iowa. On October 26, 1996, cashiers in both stores sold alcoholic beverages to underage customers without requiring identification or attempting to ascertain the customer's age. These sales violated policies and procedures established by the corporations to prevent the sale of alcoholic beverages to minors.

Both corporations were charged with the crime of selling alcoholic beverages to an underage person in violation of Iowa Code sections 123.47 and 123.49(2)(h) (1995). These simple misdemeanor charges were tried to the court and both defendants were found guilty. Their convictions were affirmed on appeal to the district court. We then granted discretionary review. See Iowa Code § 814.6(2)(d).

II. Issues on Appeal and Standard of Review.

The defendants allege procedural defects in the citation, summons and service of the charges; they also raise constitutional claims related to their convictions. We need not reach these issues, however, because we find merit in the defendants' contention that the evidence cannot sustain their convictions under sections 123.47 and 123.49(2)(h).

Casey's and Hy-Vee argue that there is no evidence that they, as corporate entities, engaged in culpable conduct so as to directly violate sections 123.47 and 123.49(2)(h). The State does not contest this assertion, but rather relies on the corporations' alleged vicarious responsibility for their employees' actions. The State first contends that corporate liability for illegal sales made by an employee is implicit in sections 123.47 and 123.49(2)(h). Alternatively, the State claims Iowa Code section 703.5(1) imposes vicarious liability upon corporate employers under the facts presented here.

The precise claim in this appeal is based on the alleged insufficiency of the evidence to support the verdict. We review the record in the light most favorable to the State in assessing the sufficiency of the evidence. See State v. Milner, 571 N.W.2d 7, 10 (Iowa 1997). The determinative question, however, is whether the statutes in question render corporate defendants criminally responsible for the actions of their employees in selling alcoholic beverages to a minor in contravention of company policies and procedures. We review the trial court's interpretation of the relevant statutes for correction of errors of law. See State v. Francois, 577 N.W.2d 417, 417 (Iowa 1998); State v. White, 563 N.W.2d 615, 617 (Iowa 1997).

The primary rule of statutory interpretation is to give effect to the intention of the legislature. See White, 563 N.W.2d at 617. To ascertain that intent, we look to the language of the statute. See id. We consider not only the commonly understood meaning of the words used in the statute, but also the context within which they appear. See Lockhart v. Cedar Rapids Community Sch. Dist., 577 N.W.2d 845, 847 (Iowa 1998); Iowa Code § 4.1(38). Finally, we construe statutes that relate to the same or a closely allied subject together so as to produce a harmonious and consistent body of legislation. See State v. McSorley, 549 N.W.2d 807, 809 (Iowa 1996). We turn now to a review of the pertinent statutes.

III. Do Sections 123.47 and 123.49(2)(h) Impose Vicarious Liability on a Licensee or Permittee for the Sale of Alcohol to a Minor?

Section 123.47 prohibits the sale of alcohol to a minor:

A person shall not sell ... alcoholic liquor, wine, or beer to any person knowing or having reasonable cause to believe that person to be under the age of eighteen....

Section 123.49(2)(h) contains a similar prohibition:

A person or club holding a liquor control license or retail wine or beer permit under this chapter, and the person's or club's agents or employees, shall not....

....

h. Sell, give, or otherwise supply any alcoholic beverage, wine, or beer to any person, knowing or failing to exercise reasonable care to ascertain whether the person is under legal age....

The State argues that the evidence supports the defendants' convictions for violating these statutes under the following rationale.

The State first points out that the statutory prohibitions apply to a "person," and that word is defined to include a corporation. See Iowa Code § 123.3(25). Because a corporation can act only through an employee, the State reasons that the legislature must have contemplated criminal liability for corporations based on the acts of their employees. We find this analysis unpersuasive because these statutes do not impose vicarious liability.

Vicarious liability occurs when "one [person] is made liable, though without personal fault, for the bad conduct of someone else." See Wayne R. La Fave & Austin W. Scott, Jr., Criminal Law § 3.9, at 250 (2d ed.1986) [hereinafter "La Fave, Criminal Law" ]; see also Randall's Int'l Inc. v. Hearing Bd., 429 N.W.2d 163, 165 (Iowa 1988) (holding permittee was vicariously liable under section 123.50(3) for employee's sale of beer to a minor for purposes of administrative regulation). This doctrine is contrary to the "basic premise of criminal justice that crime requires personal fault." La Fave, Criminal Law § 3.9, at 250; accord John J. Yeager, Ten Years with the Iowa Criminal Code, 38 Drake L.Rev. 831, 847 (1988-89). As La Fave explains in his treatise on criminal law,

It is a general principle of criminal law that one is not criminally liable for how someone else acts, unless of course he directs or encourages or aids the other so to act. Thus, unlike the case with torts, an employer is not generally liable for the criminal acts of his employee even though the latter does them in furtherance of his employer's business. In other words, with crimes defined in terms of harmful acts and bad thoughts, the defendant himself must personally engage in the acts and personally think the bad thoughts, unless, in the case of a statutory crime, the legislature has otherwise provided.

La Fave, Criminal Law § 3.2(f), at 202; accord id. § 3.9(a), at 251. Thus, if a statutory crime requires mental fault, "it is the rule that the employer must personally know or be wilful or have the requisite intention [before he will] be liable for the criminal conduct of his employee...." Id. at 252.

We begin, therefore, with an examination of the statutes to determine whether they require mental fault or whether they impose strict liability. ¹ Such an examination reveals that a mens rea element is included in both crimes.

We had the opportunity to consider whether section 123.47 required mental fault in Bauer v. Cole, 467 N.W.2d 221 (Iowa 1991), a negligence case premised on a violation of section 123.47. In that case, the plaintiffs, an injured minor and his parents, sued the hosts of a New Year's Eve party for injuries sustained by the minor in an automobile accident. Bauer, 467 N.W.2d at 222. The plaintiffs alleged the defendants had provided liquor to the minor driver causing his intoxication, which in turn caused the accident. Id. The plaintiffs appealed from an adverse jury verdict, claiming error in the instruction submitting the plaintiffs' negligence claim based on section 123.47. Id. at 223.

In the challenged instruction, the trial court had required the plaintiffs to prove the defendants had knowingly supplied alcohol to the minor driver. Id. The plaintiffs argued that knowledge was not an element of the offense. Id. In ruling that the instruction was correct, this court held that section 123.47 requires proof of the defendants criminal intent: "[W]e conclude that defendants' knowledge of the transaction must be shown to prove a criminal violation under section 123.47." Id.; accord La Fave, Criminal Law § 3.9(a), at 252 (stating if the statutory crime is worded in language such as "knowingly," "wilfully," or "with intent to," the statute requires mental fault).

We think the same conclusion is appropriate with respect to section 123.49(2)(h). Section 123.49(2)(h) requires that the defendant sell the alcoholic beverage "knowing or failing to exercise reasonable care to ascertain whether the person is under legal age." Iowa Code § 123.49(2)(h). Similarly, section 123.47 requires that the defendant "know[ ] or hav[e] reasonable cause to believe" that the person buying the alcoholic beverage is under the age of eighteen. Id. § 123.47. The similar language of section 123.49(2)(h) calls for the same interpretation given to section 123.47 in Bauer, namely, that proof of the defendant's criminal intent is required for a criminal violation. Thus, a licensee or permittee cannot be held strictly criminally liable for the illegal sale of alcohol to a minor; there must be proof that the sale to a minor was made "with the knowledge, or by the...