State v. Swalve, 23210.

• Decision Date: 02 February 2005
• Docket Number: No. 23210.,23210.
• Citation: 2005 SD 17,692 N.W.2d 794
• Parties: STATE of South Dakota, Plaintiff and Appellee, v. Lance M. SWALVE, Defendant and Appellant.
• Court: South Dakota Supreme Court

692 N.W.2d 794

2005 SD 17

STATE of South Dakota, Plaintiff and Appellee, v. Lance M. SWALVE, Defendant and Appellant.

No. 23210.

Supreme Court of South Dakota.

Argued January 11, 2005.

Decided February 2, 2005.

Lawrence E. Long, Attorney General, Grant E. Gormley, Assistant Attorney General, Pierre, South Dakota, Attorneys for plaintiff and appellee.

Philip R. Parent of Arneson, Issenhuth & Parent, L.L.P., Madison, South Dakota, Attorney for defendant and appellant.

SABERS, Justice.

Lance Swalve (Swalve) operated two auto dealerships in South Dakota. Swalve was charged and convicted of numerous counts of grand theft and failure to deliver title. Swalve appeals and we affirm.

Facts

Swalve operated two auto dealerships in Watertown and Arlington: Kneips of Watertown and Kneips GMC. When purchasing vehicles from these businesses, customers would commonly trade-in vehicles that had outstanding liens on them and would also purchase extended warranties, also referred to as "service contracts," on the "new" vehicles. It was then the dealerships' responsibility to pay off the outstanding liens on the trade-in vehicles and forward the extended warranty contracts to the warranty company.

In the later part of 2002, local law enforcement and the South Dakota Division of Motor Vehicles received a number of complaints alleging: (1) the auto dealerships failed to pay off the outstanding liens on trade-in vehicles, (2) the dealerships failed to purchase extended warranties on behalf of their customers, and (3) Certificates of Title to the newly purchased vehicles were not provided to the buyers. An investigation ensued and ultimately concluded with Swalve surrendering his dealer license on November 22, 2002.

On May 5, 2003, Swalve was charged by Complaint with seventy-seven counts of grand theft and failure to deliver title. Following a jury trial, Swalve was found guilty of twenty-one counts of grand theft and thirty counts of failure to deliver title.

Standard of Review

In determining whether a trial court erred in denying a defendant's motion for judgment of acquittal, "[o]ur inquiry is whether the State set forward sufficient evidence from which the finder of fact could reasonably find the defendant guilty." State v. Boston, 2003 SD 71, ¶ 6, 665 N.W.2d 100, 103 (citing State v. Gonzalez, 2001 SD 47, ¶ 7, 624 N.W.2d 836, 838). "A guilty verdict will not be set aside if the state's evidence and all favorable inferences that can be drawn therefrom support a rational theory of guilt." State v. Phair, 2004 SD 88, ¶ 16, 684 N.W.2d 660, 665 (quoting State v. Downing, 2002 SD 148, ¶ 22, 654 N.W.2d 793, 800).

1. Whether the trial court erred in failing to grant a motion for judgment of acquittal on charges of grand theft by deception in creating a false impression as to title status and the ability to provide clear title.

Swalve was convicted of the following counts of Grand Theft by Deception: 17, 49, 54 and 60. The jury determined that Swalve deceived his customers by creating a false impression as to the title status and the ability to provide clear title.

The record shows that the vehicles in question were taken in by the dealerships as trade-ins. Each of these vehicles had outstanding liens which were supposed to be paid off by the dealership. But, in each of these instances, the vehicles were re-sold before the prior liens were paid off.¹

Swalve correctly states that in the crime of Theft by Deception, there must exist in the mind of the perpetrator the specific intent to defraud at the time the property was received.² He contends that since he was not the primary salesperson in each of these instances the State failed to offer any evidence of the requisite intent to defraud at the time the transaction was conducted. However, both Ryan Easthouse and Laurie Bleeker, two former employees, testified that it was Swalve himself who determined which lien pay offs on trade-in vehicles would be made and when they would be made. Additionally, Easthouse testified that regardless of which salesperson was involved, Swalve was the ultimate authority on any sale. It can be reasonably inferred from this evidence that Swalve knew that he did not have clear title to these trade-in vehicles when they were re-sold due to the fact that he had not yet paid off the outstanding liens on the vehicles.

Based on the above, the record discloses sufficient evidence to support the jury's finding that Swalve intended to defraud these customers at the time the trade-in vehicles with outstanding liens were resold to them. Therefore, it has not been shown that the trial court erred in denying Swalve's motion for judgment of acquittal on Counts 17, 49, 54 and 60. We affirm Issue 1.

2. Whether the trial court erred in failing to grant a motion for judgment of acquittal on charges of grand theft by deception in creating a false impression as to the ability to pay off the outstanding liens on trade-in vehicles.

Swalve was convicted of the following counts of Grand Theft by Deception: 32, 55, 55A, 57, 65 and 72. In these instances, the jury concluded that Swalve intended to deceive by creating a false impression as to the ability to pay off the outstanding loans owed on trade-in vehicles.

The record shows that the vehicles involved in these counts were taken in by the two dealerships as trade-in vehicles. However, the dealership subsequently failed to pay-off the outstanding liens on the vehicles. As a result, the lien holders sought payment from the prior owners even though they no longer owned the vehicles.

Again, Swalve contends that he was not the salesperson in these particular transactions. Furthermore, Swalve gave money to two of the complaining customers so that payments could be made to the outstanding liens when the liens were not paid off in a timely manner.³ Swalve argues that this indicates that he did not intend to defraud the customers at the time the trade-ins were made. Therefore, it is his contention that the State's evidence failed to prove intent to defraud on his part.

The testimony provided by the customers who traded-in these vehicles indicates that Swalve himself was involved to some extent in the trade-in deals pertaining to counts 32, 57, 65, and 72. The evidence also shows that Swalve personally signed the loan applications related to the deals involved in counts 55, 55A, and 72. Additionally, Ryan Easthouse and Laurie Bleeker, both testified that it was Swalve who determined which lien pay offs on trade-in vehicles would be made and when they would be made.

Concerning Swalve's contention that his partial payment of two outstanding liens indicates that he did not intend to defraud the customers at the time the trade-ins were made, we look to SDCL 22-30A-10.1 which provides:

If a person, who has been accused of theft, restores or returns the property allegedly appropriated before an indictment or information is laid before a magistrate, such fact may be considered in mitigation of punishment. The restoration or return of the property is not a defense nor may it be considered by the finder of fact.

(emphasis added). This Court has held that "[t]he plain language of this statute clearly excludes evidence of restoration or repayment from being considered by the finder of fact in theft prosecutions. There are no exceptions." Phair, 2004 SD 88, ¶ 10, 684 N.W.2d at 664. Therefore, any evidence that Swalve may have made partial payments subsequent to his failure to fully pay off the outstanding liens in a timely manner cannot be considered.

Based on the above, the record discloses sufficient evidence to support the jury's finding that Swalve intended to defraud these customers when he failed to pay off the outstanding liens on the trade-in vehicles in a timely manner. Therefore, it has not been shown that the trial court erred in denying Swalve's motion for judgment of acquittal on Counts 32, 55, 55A, 57, 65 and 72. We affirm Issue 2.

3. Whether the trial court erred in failing to grant a motion for judgment of acquittal on charges of grand theft by deception in creating a false impression that a vehicle warranty would be provided.

It is common industry practice that when an auto dealer sells a vehicle, an extended warranty or "service contract" is offered to the customer through the dealer. CNA National Warranty Corporation (CNA) had an agreement with Kneips GMC where the dealership would offer CNA's extended warranties to their customers. CNA would set the wholesale price and Kneips GMC would set the retail price. The customer pays the retail price and the dealer remits the wholesale price to CNA. Pursuant to the agreement, Kneips GMC was to report sales of extended warranties and pay CNA for those contracts within ten days of the end of the month in which they were sold. In the three years that Kneips GMC had this arrangement with CNA over 200 extended warranties were sold. However, for several months in 2002, Swalve remitted no money to CNA for extended warranties that his dealership sold to customers. CNA was unaware that the extended warranties had been sold in its name and had not received any payment on these contracts up to the time of trial.

In Counts 36, 41, 44, 45 and 51, Swalve was convicted of Theft by Deception for creating a false impression to the customer that an extended warranty had been purchased on their behalf, when in fact it had not.⁴ Swalve now argues that the trial court should have granted his judgment of acquittal on these counts because there was no evidence that Swalve intended to defraud his customers at the time he collected monies for the extended warranties. He also points out that all of the individuals in these counts eventually received service contracts effective as of the date of sale.

The record shows that when a customer purchased an extended warranty along with a "new" vehicle, the financing for the purchase would include payment for the "new" vehicle, payment for any...