State v. Muzio

• Decision Date: 13 January 1987
• Docket Number: No. 9200,9200
• Parties: STATE of New Mexico, Plaintiff-Appellee, v. Edward MUZIO, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 879

732 P.2d 879

105 N.M. 352

STATE of New Mexico, Plaintiff-Appellee, v. Edward MUZIO, Defendant-Appellant.

No. 9200.

Court of Appeals of New Mexico.

Jan. 13, 1987.

Certiorari Denied Feb. 18, 1987.

Paul G. Bardacke, Atty. Gen., Reginald J. Storment, Sp. Asst. Atty. Gen., Santa Fe, for plaintiff-appellee.

Paul J. Kennedy, Albuquerque, for defendant-appellant.

OPINION

DONNELLY, Chief Judge.

Defendant appeals his conviction on three counts of issuing worthless checks, contrary to NMSA 1978, Section 30-36-4 (Repl.Pamp.1980). On appeal, defendant claims: (1) that the trial court erred in allowing the criminal prosecution because it was barred by the federal Supremacy Clause and Bankruptcy Code; (2) that the trial court used the statutory presumption of intent to defraud, NMSA 1978, Section 30-36-7(B) (Repl.Pamp.1980), thus violating the Supremacy Clause and defendant's due process rights; (3) that the trial court erroneously assumed it lacked power to order restitution; (4) that defendant's conviction of issuing worthless checks is not a fourth-degree felony offense under the Criminal Sentencing Act; (5) that the trial court abused its discretion in denying defendant's motion for a new trial; and (6) that there was insufficient evidence to uphold defendant's conviction.

We affirm as to each of the issues, except as to the designation of the degree of the crime charged for the offenses of issuing worthless checks; as to the latter issue, we remand for correction of the judgment and resentencing.

FACTS

Defendant operated a restaurant in Coronado Shopping Center in Albuquerque. In May 1985, defendant began experiencing financial problems stemming in part from a civil judgment obtained against him in excess of $53,000. In June 1985, defendant closed his business and moved his equipment to other locations. Defendant issued a number of checks drawn on his business account in excess of the funds on deposit, including a check on June 4, 1985, to Sears in the amount of $177.82, for the purchase of tools (Count II); a check dated May 31, 1985, to the Price Club in the amount of $2,114.26, for TV sets, VCR's, radios, gourmet food, alcohol and other items (Count V); and a check to the Price Club dated June 1, 1985, in the sum of $5,141.96, for other miscellaneous merchandise (Count VI).

The three checks listed above were dishonored and defendant failed to return the merchandise or to pay the victims the amounts due. Defendant then filed for bankruptcy. The district attorney sought and obtained a grand jury indictment charging defendant with six counts of issuing worthless checks. Following a bench trial, defendant was convicted on Counts II, V and VI. Defendant was acquitted on the remaining charges.

I. APPLICABILITY OF SUPREMACY CLAUSE

Defendant argues that the district attorney initiated the criminal proceeding for the purpose of collecting the debts incurred by defendant due to the issuance and dishonor of the checks, and that the debts represented by the dishonored checks had been discharged in bankruptcy. Defendant asserts that the federal Bankruptcy Code, 11 U.S.C. Sec. 362 (1978), provides for an automatic stay of collection proceedings for discharged debts and that, because the debts were subsequently discharged in bankruptcy, the state prosecution was improper.

Defendant also contends that the state criminal prosecution against him was improper under the Supremacy Clause of the federal constitution. U.S. Const. art. VI, cl. 2. In advancing this contention, defendant also cites 11 U.S.C. Section 524(a)(2) (1978), which specifies that a discharge "operates as an injunction against the commencement or continuation of an action ... to collect, recover or offset any such debt * * * of the debtor * * * whether or not discharge of such debt is waived."

The issue of whether a criminal proceeding initiated against defendant under the state Worthless Check Act, NMSA 1978, Sections 30-36-1 to -10 (Repl.Pamp.1980 and Cum.Supp.1985), is void and without effect under the federal Supremacy Clause, due to the accused's prior discharge in bankruptcy, is one of first impression in New Mexico. On appeal, defendant, although acknowledging that he failed to raise this issue below, argues that his prosecution was barred by law, hence we interpret his argument to raise a jurisdictional issue. See Williams v. Public Service Commission of Wyoming, 626 P.2d 564 (Wyo.1981) (court held that appellant's Supremacy Clause challenges raised question of the public service commission's subject matter jurisdiction and must be addressed on merits even though issue was never raised below).

The purpose of the federal bankruptcy law is to " 'relieve the honest debtor from the weight of oppressive indebtedness and permit him to start afresh free from the obligations and responsibilities consequent upon business misfortunes.' " Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699, 78 L.Ed. 1230 (1934) (citing Williams v. United States Fidelity & Guaranty Co., 236 U.S. 549, 554-55, 35 S.Ct. 289, 290, 59 L.Ed. 713 (1915)). The purpose of the Worthless Check Act is to remedy the evil of giving checks on a bank or depository without providing funds to pay or satisfy them. NMSA 1978, Sec. 30-36-3 (Cum.Supp.1986). To be convicted under the Act requires an express finding of an intent to defraud. NMSA 1978, Sec. 30-36-4 (Repl.Pamp.1980). Thus, this is not a statute for debt collection but, rather, a statute created to punish an evil intent and an evil action. Defendant's prosecution centered around his issuing of worthless checks with intent to defraud Sears and Price Club, not his inability to pay his bills.

A debtor's filing of a petition for bankruptcy or obtaining of a discharge under the Bankruptcy Code does not prevent the institution and prosecution of criminal proceedings against a debtor for criminal acts. 11 U.S.C. Sec. 362(b)(1) (1978). See Barnette v. Evans, 673 F.2d 1250 (11th Cir.1982); Parker v. United States, 153 F.2d 66 (1st Cir.1946); People v. Washburn, 97 Cal.App.3d 621, 158 Cal.Rptr. 822 (1979); State v. Bontz, 192 Kan. 158, 386 P.2d 201 (1963); see also Hensley & Smith, Preemption Effect on Younger v. Harris Abstention: May a Bankruptcy Court Enjoin a State Criminal Prosecution?, 35 Mercer L.R. 1345 (1984). The Bankruptcy Code only prohibits the commencement of a criminal action to "collect, recover or offset" a debt. 11 U.S.C. Sec. 524(a)(2). Here, defendant was tried for issuing worthless checks with intent to defraud. Substantial evidence was presented to support the inference that defendant knew the checks were worthless when he issued them. The conclusion by the trier of fact that defendant acted with the intent to defraud is a question of the sufficiency of the evidence, and sufficiency of the evidence questions are viewed in the light most favorable to the verdict, indulging all inferences and resolving all conflicts in favor of that verdict. State v. Brown, 100 N.M. 726, 676 P.2d 253 (1984). Consequently, we need not, as defendant suggests, look to the prosecutor's motives in commencing criminal proceedings. On its face, the Worthless Check Act addresses the passing of worthless checks with the intent to defraud and a defendant's prosecution for violation of such law is not precluded by filing for or obtaining a discharge in bankruptcy. The provisions of the Bankruptcy Act are not so intrusive so as to pardon a bankrupt from the consequences of a criminal offense. Parker. The federal Bankruptcy Act is meant to protect those in economic distress, not to shelter a party from liability for criminal conduct. Barnette v. Evans; In re Moore, 111 Fed. 145 (W.D.Ky.1901); State v. Eyre, 39 Wash.App. 141, 692 P.2d 853 (1984).

Defendant's assertion of fundamental error or bar of criminal prosecution under the Supremacy Clause does not apply to the case before us.

II. PRESUMPTION OF FRAUD

Defendant argues that the trial court relied on the statutory presumption of intent to defraud in reaching its decision that he was guilty of three counts of issuing worthless checks. Under Section 30-36-7(B), a person notified of the dishonor of one or more checks must pay the checks in full within three business days in order to avoid the presumption of fraud. Defendant claims that when he filed for bankruptcy he was precluded from paying off the checks because the bankruptcy court would void the repayment as an improper preference to certain creditors. Thus, defendant contends that this issue involves fundamental error and that the state court was deprived of jurisdiction to proceed with the prosecution against him. We disagree.

The alleged misuse of the statutory presumption was not raised at trial and there is no evidence in the record to support defendant's contention that the trial court applied the presumption. Defendant did not ask the trial court for a factual finding concerning the statutory presumption nor did defendant enter a specific objection. New issues may not be raised on appeal, whether they are listed in the docketing statement or not. Melon v. State, 90 N.M. 787, 568 P.2d 1233 (1977). Defendant's claim of fundamental or jurisdictional error is without merit. Moreover, at the trial on the merits, the court did not mention the statutory presumption of fraud in its findings of fact or conclusions of law. The trial court correctly stated that defendant's intent at the time of issuing the checks was determinative as opposed to his supposed failure to honor the checks. Consequently there is no factual basis that the trial court relied on the presumption in reaching its decision. Additionally, other substantial evidence exists in the record upon which to infer defendant's intent to defraud. Based on the record, therefore, we cannot say that the trial court abused its discretion by inferring defendant's guilt from other evidence apart from the statutory presumption of intent to defraud.

III. RESTITUTION...