State v. Larson

• Decision Date: 03 February 2000
• Docket Number: No. C7-98-712.,C7-98-712.
• Citation: 605 N.W.2d 706
• Parties: STATE of Minnesota, Respondent, v. Frank Donald LARSON, petitioner, Appellant.
• Court: Minnesota Supreme Court

605 N.W.2d 706

STATE of Minnesota, Respondent, v. Frank Donald LARSON, petitioner, Appellant.

No. C7-98-712.

Supreme Court of Minnesota.

February 3, 2000.

Douglas H.R. Olson, Minneapolis, for appellant.

Michael Hatch, Attorney General, Thomas R. Ragatz, Asst. Attorney General, St. Paul, Ross E. Arneson, Blue Earth County Attorney, Mankato, for respondent.

Heard, considered, and decided by the court en banc.

OPINION

LANCASTER, Justice.

A Blue Earth County jury found appellant, Frank Donald Larson, guilty of conspiracy to commit theft (temporary taking),¹ two counts of aiding and abetting theft (temporary taking),² and one count of failure to pay over state funds.³ Larson appealed his convictions, arguing that lease security deposit funds are not the "property of another" under the theft statute⁴ and that Minn.Stat. § 609.445 (1996), failure to pay over state funds, should not apply to automobile dealers. The court of appeals affirmed appellant's convictions. We granted appellant's petition for review and now reverse the decision of the court of appeals and vacate appellant's convictions.

Between 1992 and 1995, appellant owned Southwest Leasing (SW Leasing), an automobile and equipment leasing business. During this three-year period, SW Leasing general manager Douglas Schommer and appellant kept the business open despite heavy financial difficulties at least in part by not refunding security deposits to customers and not paying to the state the sales tax from lease buyouts. Although some customers received their security deposits after the lease term, appellant failed to return hundreds of other customers' security deposits. After receiving numerous complaints from SW Leasing customers, the state executed search warrants at SW Leasing on June 19 and July 7, 1995. Officers found shoeboxes full of SW Leasing checks written out but never sent to customers. Shortly thereafter, SW Leasing went out of business.

The state charged appellant in an eleven-count complaint as follows: conspiracy to commit theft (temporary taking) (1 count); aiding and abetting theft (temporary taking) (2 counts); theft (permanent taking)⁵ (3 counts); defeating security on personalty⁶ (4 counts); and failure to pay over state funds (1 count). At the omnibus hearing, appellant sought without success to obtain dismissal of the six theft counts, arguing that lease security deposits are not the "property of another"⁷ for purposes of the theft statute. Appellant maintained that lease security deposits are merely a debt owed by the lessor to the lessee and, while this debt may be recovered in a civil action, failing to return the deposit funds could not form the basis for criminal charges.

Appellant also sought dismissal of the one count of failure to pay over state funds, asserting the statute does not apply to an automobile dealer and if it did, it would create an unconstitutional strict liability on appellant for the business's failure to remit taxes. The trial court denied appellant's motion to dismiss the complaint. Appellant then sought to certify the security deposit issue as a question of law that was important or doubtful pursuant to Minn. R.Crim. P. 28.03, but the trial court declined to certify the question.

At trial, Schommer testified that appellant directed him not to return the security deposits to most of those customers who had fulfilled the terms of their automobile leases. Appellant denied directing Schommer to unlawfully withhold the deposits, but appellant acknowledged signing a 1993 letter that stated appellant directed an "untimely refunding of security deposits." Appellant further conceded that SW Leasing did not pay to the state all the sales taxes it collected.

The state argued in summation to the jury that appellant committed theft at two different moments: (1) when appellant used the security deposit funds during the term of the leases, and (2) when appellant failed to return the deposits to customers at the end of their leases.⁸ Appellant argued that he intended to return the security deposits but his poor financial situation prevented him from doing it. Appellant also argued that his debt prevented him from remitting to the state the excise taxes collected from automobile sales.

The jury found appellant not guilty of the four counts of defeating security on personalty and three counts of theft-permanent taking. The jury found appellant guilty of three counts of theft-temporary taking and one count of failure to pay over state funds.

On the counts of conviction, the trial court sentenced appellant to one year and a day, thirteen months, seventeen months and eighteen months to run concurrently, and imposed fines of $25,000 on the theft charges and $5,000 on the failure to pay over state funds. The court stayed execution of the sentences on all four counts and placed the appellant on probation for ten years on the condition that he serve nine months in the county jail, complete 200 hours of community service, pay the fines and pay restitution of $93,329.82. The court stayed all conditions pending appeal except paying restitution.

The court of appeals rejected appellant's claims that the state failed to prove the security deposits were the "property of another." The court of appeals distinguished security deposits from advance payments, which the court had earlier held not to be the "property of another." State v. Larson, No. C7-98-712, 1999 WL 17666 (Minn.App. Jan. 19, 1999). Advance payments became the property of the receiver on receipt, the court reasoned, but security deposits "are returned, not repaid." Id. The court went on to distinguish the late payment of tax funds to the state under Minn.Stat. § 168A.11, from a total lack of payment under section 609.445 and upheld appellant's convictions.

I.

Appellant argues that there was insufficient evidence to convict him of theft-temporary taking because the state did not prove the security deposits were the "property of another." When the sufficiency of the evidence for a conviction is challenged, we make a thorough review of the record to determine whether the evidence, viewed in a light most favorable to the conviction, was sufficient to permit the jurors to reach their verdict. See State v. Steinbuch, 514 N.W.2d 793, 799 (Minn. 1994). Questions of law are reviewed de novo by this court. See Matter of Linehan, 518 N.W.2d 609, 613 (Minn.1994).

Relying on State v. Fernow, the state argues it is a question of fact whether security deposit funds are the "property of another." 354 N.W.2d 438, 439 (Minn. 1984). Fernow was prosecuted under section 609.52, subd. 2(1) for possessing and concealing stolen property. One issue in Fernow was whether the jury instructions made clear that the stolen car must be the "property of another," specifically the victim's property. Id. at 439-40. The court held that the instructions were sufficiently clear to alert the jury to this element of theft. Id. at 440. Fernow, however, does not resolve the underlying question of law as to who holds title to lease security deposits at what time. The trial court should have resolved this legal question in the first instance.

In a criminal trial, the burden is on the state to prove beyond a reasonable doubt the existence of every element of the crime charged. See In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970); State v. Clausen, 493 N.W.2d 113, 116 (Minn.1992). One element of theft-temporary taking is that the property in question must have been the "property of another." See Minn.Stat. Ann. § 609.52 & Advisory Committee Comment therein; see also 10 Minn. Dist. Judges Ass'n, Minnesota Practice, CRIMJIG 16.02 (3d ed.1990). The jury was instructed that the state had to prove that the defendant took "property of another," but provided no guidance for the jury to decide whether the security deposits were property of another.

The court denied appellant's request for an instruction that would have required the jury to find a trust or trustlike relationship in order to satisfy this element. As support for his request, appellant relied on State v. Marshall, 541 N.W.2d 330, 332 (Minn.App.1995),rev. denied (Minn. Feb. 27, 1996), for requiring that a trust-like limitation must exist on appellant's use of these funds during the period of the lease. Absent such a limitation, appellant argued to the trial court and to this court that the deposits were not the "property of another" under the theft statute. The court of appeals noted in Marshall that after the 1963 revision of the criminal code, embezzlement was dropped as a separate crime in favor of a general theft provision. 541 N.W.2d at 332. While a fiduciary relationship is not necessary for all theft charges involving money, when theft-temporary taking involves an advance payment of money, the state must establish a fiduciary relationship. See id. The state concedes that it had hoped to, but did not, establish a trust-like limitation on the deposit funds.

The crime of theft by temporary taking is complete upon the taking, and does not require an intent to permanently deprive (in contrast to theft by permanent taking) or acquisition under false pretenses (in contrast to fraud or swindle); nor is it a defense that funds ultimately were repaid. See Minn.Stat. Ann. § 609.52 & Advisory Committee Comments therein; see also State v. O'Hagan, 474 N.W.2d 613, 622 (Minn.App.1991), rev. denied (Minn. Sept. 25, 1991). Because the crime is complete upon the taking, it is important to establish when the property was taken and to whom it belonged at the time it was taken.

Here, the state had alternative theories as to when the theft took place. One theory is that it happened when the funds were commingled and spent. Our review of the record convinces us that the state, recognizing that it was unable to prove a trust or trust-like relationship, did not place primary emphasis on the theory that it was criminal to commingle...