State v. Welsh, 58655

• Decision Date: 30 August 1976
• Docket Number: No. 58655,58655
• Citation: 245 N.W.2d 290
• Parties: STATE of Iowa, Appellee, v. Allan Clyde WELSH, Appellant.
• Court: Iowa Supreme Court

Page 290

245 N.W.2d 290

STATE of Iowa, Appellee, v. Allan Clyde WELSH, Appellant.

No. 58655.

Supreme Court of Iowa.

Aug. 30, 1976.

James Campbell, of Peters, Campbell & Pearson, P.C., Council Bluffs, for appellant.

Richard C. Turner, Atty. Gen., Earl W. Roberts, Jr., and Steven K. Sandblom, Asst. Attys. Gen., and Lyle A. Rodenburg, County Atty., for appellee.

Heard by MOORE, C.J., and LeGRAND, REES, UHLENHOPP and REYNOLDSON, JJ.

REYNOLDSON, Justice.

A jury found defendant guilty of violating § 710.4, The Code, 'embezzlement by He appeals from a judgment sentencing him to a term not to exceed five years in the men's reformatory at Anamosa. We affirm.

As support for its verdict, the jury could have found the following facts.

Defendant was manager of Sam's Self-Service Restaurant in Council Bluffs, an enterprise owned by McBluffs, Inc. His duties included hiring and firing employees, purchasing food and supplies, limited bookkeeping, and depositing daily receipts.

In the summer of 1974 Donald J. Mangan, a principal in McBluffs, Inc., and Bernard W. Menard, Jr., assistant in charge of bookkeeping and accounting, conferred with defendant and expressed dissatisfaction with his work. In September Mangan told defendant his services would be terminated in 30 days unless his performance improved.

Defendant's duties included making up a daily report, in duplicate, specifying gross receipts and other transactions. He daily telephoned this information, including the amount of the day's bank deposit, to the corporate office in Omaha, where it was recorded on a 'spread sheet'. The original of the daily report followed by mail delivery. When the report was received in Omaha it was used to confirm the figures previously furnished by telephone, then destroyed. Copies of the daily reports were retained in the basement office at the restaurant.

The daily report defendant prepared for October 3, 1974 (a Thursday) disclosed gross receipts of $1276.46, cash pay-outs of $1.87, and a 'bank deposit' entry of.$1274. As the restaurant's closing hour was 11:00 P.M., it was the policy of the company to deposit receipts on the next bank day.

At about 8:30 A.M. on the following day, October 4, defendant called Menard to transmit the October 3 transactions. He told Menard he had arrived early to get the report out, go to the bank, and take a couple of hours off for personal errands. On the same morning defendant told another employee he was going to the bank. The employee believed 'he had the sack with him' at that time.

Defendant never returned to work. In the afternoon Menard telephoned a restaurant employee and learned defendant was still absent.

On Saturday, October 6, Mangan and Menard managed the cafe. Mangan called defendant and informed him his employment was terminated because of his absence from work the prior day. The following Monday defendant turned in his keys and negotiated his final vacation pay. At that time it had not been discovered funds were missing.

Shortly after November 1, when Menard reconciled the books and bank statement for October, he discovered the.$1274 deposit representing the business done on October 3 had not been deposited in the bank on October 4 or at any other time.

Defendant now asserts trial court erred (1) in overruling his motion to dismiss, made after the close of evidence, on the ground there was insufficient evidence (a) to show he was a 'bailee' (§ 710.4, The Code) as opposed to an employee or agent who must be charged under § 710.5, The Code, or (b) to show he appropriated the missing money to his own use, (2) in overruling objections to admission of the daily report copies, spread sheets, and bank statement, and (3) in violating his due process right under the federal constitution by imposing the maximum penalty without a stated explanation or reasons.

I. Ruling on motion to dismiss.

Defendant's 'motion to dismiss', made at the close of evidence, is a motion more appropriately directed to the court in a non-jury trial. We will consider it as a motion for directed verdict. See State v. Jurgenson, 225 N.W.2d 310, 312 (Iowa 1975); Henschel v. Hawkeye-Security Insurance Company, 178 N.W.2d 409, 414 (Iowa 1970); cf. State v. Deets, 195 N.W.2d 118 123--125 (Iowa 1972).

In the first ground of this motion defendant asserted the State failed to prove he was a 'bailee', which he argues was essential under the criminal statute specified in the information:

'710.4 Embezzlement by bailee. Whoever embezzles or fraudulently converts to his own use, or secretes with intent to embezzle or fraudulently convert to his own use, money, goods, or property delivered to him, or any part thereof, which may be the subject of larceny, shall be guilty of larceny and punished accordingly.'

Defendant contends if the State proved any crime it was not a violation of § 710.4, supra, but a violation of § 710.5, The Code, 'embezzlement by agents'. He quotes from State v. Folger, 204 Iowa 1296, 1301, 210 N.W. 580, 582 (1926) that '(n)ot only are the offenses separate and distinct, but evidence which will sustain one would justify, if not require, an acquittal of the other.'

It is clear defendant was an employee of McBluffs, Inc. His embezzlement of corporate funds would fall squarely within the proscription of § 710.5. His conviction under § 710.4 (bailee) may be affirmed only if we determine the prosecution, under these circumstances, had a right to elect between § 710.4 and § 710.5.

In this connection, we think defendant's reliance on State v. Folger, supra, is misplaced. The court's statement that 'evidence which will sustain one (charge under 710.4 or 710.5) would justify, if not require, an acquittal of the other' was dicta. In Folger defendant had been acquitted on a § 710.5 (agency) charge because he was not shown to be an agent. He was retried and convicted under § 710.4 (bailee). Upon his appeal following the § 710.4 conviction, this court, rejecting a claim of former jeopardy, found the crimes were 'separate and distinct'. Of course, this does not mean a person cannot be both a bailee and an agent. It merely means agency must be proven under § 710.5 and bailment must be shown under § 710.4. Only bailment was established in Folger, so only § 710.4 was available to the prosecution.

In a later decision this court, applying a broad definition of bailment, held only to the 'separate and distinct' concept articulated in Folger, stating it was immaterial whether defendant charged as a § 710.4 bailee, was also an agent:

'The appellant also relies upon State v. Folger, 204 Iowa 1296, 210 N.W. 580. In said case we clearly pointed out the distinction between the two statutes, one providing the punishment for embezzlement by an agent, where proof of agency is indispensable, and the other providing for punishment for embezzlement by a bailee, where proof of bailment is indispensable. We there held that the offenses are separate and distinct.

'* * * It is not a material inquiry in this case as to whether or not the appellant was the agent of Mrs. Barnett, who owned the notes and who paid the money to the appellant, or was the agent of Mrs. Frawley, who owned the notes and to whom the appellant was in duty bound to pay the money. The simple situation is that the money at no time belonged to the appellant, nor did he have any rights therein. * * * He is charged as being a bailee of the fund and with having converted the same. He is not charged as being an agent who converted money coming into his hands.'

--State v. Cavanaugh, 214 Iowa 457, 460, 236 N.W. 96, 97 (1931).

If, as our cases indicate, a person prosecuted under § 710.4 is to be termed a 'bailee' we must give consideration to the relationship the legislature intended.

At the outset we note the word 'bailee' does not appear in the text of the statute but only in the headnote. This enactment came into being with the Code of 1897. It was designated as Title XXIV, Ch. 5, § 8, included in one of 26 titles, each prepared and enacted as a separate bill. See Article by A. Loth, 'An Outline of Iowa Codes, Compilations and Revisions', 3 I.C.A., p. VII at XIV--XVI. Following long-standing precedent in examining the enrolled bill in the office of the Secretary of State, see State v. Lynch, 169 Iowa 148, 151, 151 N.W. 81, 82 (1915); Duncombe v. Prindle, 12 Iowa 1, 11 (1861); Clare v. State, 5 Iowa 509, 510 (1858), we have confirmed the headnote was not part of the original statute. It cannot, therefore, control its construction. See § 3.3, The Code; State v. Hollingsworth, 248 Iowa 763, 769, 81 N.W.2d 27, 31 (1957); Monona County v. Waples, 226 Iowa 1281, 1287, 286 N.W. 461, 465 (1939). Thus the headnote word 'bailee', supplied by the code editor, lends no support to the contention that the legislature intended all the technical aspects of property law bailment be imposed to constrict the broad statutory language of § 710.4.

In Cavanaugh, supra, 214 Iowa at 461, 236 N.W. at 97 we said '* * * under statutes of this character * * * it is unnecessary to prove agency, and * * * a bailee, within the meaning of such a statute, is one who fraudulently converts to his own use, money, goods, or property delivered to him by another party to be held by him and returned to the bailor or delivered to another party.'

An employee falls within the Cavanaugh definition:

'When an employee receives, for his employer, property which has been handed over by a third person, the employee becomes a bailee of the article under broad definitions of bailment because for the moment possession is in the employee while title is in the employer.'

R. Perkins on Criminal Law, Ch. 4, § 1 at 243 (2d ed. 1969).

That the property is delivered to the servant or agent by a third person and not the owner does not affect the bailee relationship. State v. Anderson, 232 S.W.2d 909, 911 (1950); Smith v. State, 78 Okla.Cr. 343, 148 P.2d 206, 208 (1944); People v. Riccardi, 50 Cal.App. 427, 430, 195...