State v. Wolter

• Decision Date: 07 September 1978
• Docket Number: No. 77-655-CR,77-655-CR
• Parties: STATE of Wisconsin, Plaintiff-Respondent, v. Warren W. WOLTER, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 230

270 N.W.2d 230

85 Wis.2d 353

STATE of Wisconsin, Plaintiff-Respondent, v. Warren W. WOLTER, Defendant-Appellant.

No. 77-655-CR.

Court of Appeals of Wisconsin.

Argued Aug. 16, 1978.

Decided Sept. 7, 1978.

This is an appeal from a judgment of conviction entered on December 2, 1977 in the circuit court for Milwaukee county: Hon. Christ T. Seraphim, presiding. On June 13, 1977, Wolter was found guilty by the jury of theft by contractor in violation of secs. 289.02(5) and 943.20(1)(b) and (3)(c), Stats. On December 2, 1977, the trial court sentenced Wolter to the Wisconsin State prison for an indeterminate term not to exceed five years, stayed the execution of the sentence, and placed Wolter on probation for five years, the first year of which was to be served pursuant to sec. 973.09(4), Stats. One condition of probation required restitution in the amount of $65,000. Wolter further appeals the order denying post conviction motions.

Statutes Involved

289.01(2)(a)2. An owner of land who acts as his own general contractor in improving such land.

289.02(5) Theft by contractors. The proceeds of any mortgage on land paid to any prime contractor or any subcontractor for improvements upon the mortgaged premises, and all moneys paid to any prime contractor or subcontractor by any owner for improvements, constitute a trust fund only in the hands of the prime contractor or subcontractor to the amount of all claims due or to become due or owing from the prime contractor or subcontractor for labor and materials used for the improvements, until all the claims have been paid, and shall not be a trust fund in the hands of any other person. The use of any such moneys by any prime contractor or subcontractor for any other purpose until all claims, except those which are the subject of a bona fide dispute and then only to the extent of the amount actually in dispute, have been paid in full or pro rata in cases of a deficiency, is theft by the prime contractor or subcontractor of moneys so misappropriated and * * * is punishable under s.943.20. If the prime contractor or subcontractor is a corporation, such misappropriation also shall be deemed theft by any officers, directors or agents of the corporation responsible for the misappropriation. Any of such misappropriated moneys which have been received as salary, dividend, loan repayment, capital distribution or otherwise by any shareholder of the corporation not responsible for the misappropriation shall be a civil liability of the shareholder and may be recovered * * * and restored to the trust fund specified in this subsection by action brought by any interested party for that purpose. Except as provided in this subsection, this section does not create a civil cause of action against any other person. Until all claims are paid in full, have matured by notice and filing or have expired, such proceeds and moneys shall not be subject to garnishment, execution, levy or attachment.

943.20 Theft. (1) Acts. Whoever does any of the following may be penalized as provided in sub. (3):

(b) By virtue of his office, business or employment, or as trustee or bailee, having possession or custody of money or of a negotiable security, instrument, paper or other negotiable writing of another, intentionally uses, transfers, conceals, or retains possession of such money, security, instrument, paper or writing without the owner's consent, contrary to his authority, and with intent to convert to is own use or to the use of any other person except the owner. A refusal to deliver any money or a negotiable security, instrument, paper or other negotiable writing, which is in his possession or custody by virtue of his office, business or employment, or as trustee or bailee, upon demand of the person entitled to receive it, or as required by law, is prima facie evidence of an intent to convert to his own use within the meaning of this paragraph.

(3) Penalties. Penalties for violation of this section shall be as follows:

(c) If the value of the property exceeds $2,500, a fine of not more than $10,000 or imprisonment for not more than 15 years or both.

Robert H. Suran, Milwaukee, for defendant-appellant; Suran & Suran, Milwaukee, on brief.

Betty R. Brown, Asst. Atty. Gen., argued, for plaintiff-respondent; Bronson C. La Follette, Atty. Gen., on brief.

Before DECKER, C. J., CANNON, P. J., and MOSER, J.

MOSER, Judge.

The five issues presented on appeal are:

1. Were secs. 289.02(5) and 943.20, Stats., properly applied to Wolter's acts?

2. Did the state present evidence sufficient to meet its burden of proof with regard to the intent required by sec. 943.20(1)(b), Stats.?

3. Did the trial court properly instruct the jury that a demand for and a refusal to pay trust monies to those entitled to receive them is Prima facie evidence of an intent to convert?

4. Did the trial court commit prejudicial errors throughout the trial?

5. Did the trial court's order for restitution conflict with a federal discharge in bankruptcy?

Wolter and his wife were the sole owners and stockholders of Warjo Construction, Inc. (Warjo) and were its president and secretary respectively. Wolter was also its chief operating officer. Warjo was primarily engaged in purchasing and developing land, arranging for financing the construction of various units, acting as general contractor, and selling the units upon completion.

In 1975, Warjo purchased land on Granville Road in Milwaukee, with plans to develop a 14 unit apartment project. Wolter went to Heritage Savings & Loan Association (Heritage), seeking a construction loan for this project. On December 30, 1975, a construction loan agreement for the Granville Road project was executed with the loan amount set at $259,000. A note, secured by a construction mortgage with Heritage as mortgagee, was signed by Wolter and his wife as officers of the corporation and also as personal guarantors.

The loan agreement provided that the proceeds of the construction loan were to be used solely for the Granville Road project. As certain stages of construction were completed and after inspection of the site by Heritage personnel, the corporation would receive a draw from Heritage to pay subcontractors and materialmen.

Subcontracts were left by Warjo and construction was begun. Among the subcontractors were: EZ Roofers Company (roofing), General Lumber and Supply Company (building materials), Henry Marohl (excavation), Stolze Masonry, Inc. (masonry) and Carl Zeeb (carpentry).

Between February and July 14, 1976, Wolter requested and received six draws from Heritage totalling approximately $118,000. This included money to pay the subcontractors and materialmen on the Granville Road project. The checks were received by Warjo and, at Wolter's direction, were deposited in the Warjo checking account. Wolter signed all checks disbursing this money.

Among the subcontractors and materialmen who were not paid are: EZ Roofers $4,187.50; General Lumber and Supply $33,134.98 (with discount $27,169.74); Henry Marohl $1,599.50; Stolze Masonry $18,437.70; and Carl Zeeb $16,000, totalling some $67,000.

Heritage did not authorize the use of draw monies for any purpose other than paying the subcontractors and materialmen on the Granville Road project. The subcontractors and materialmen did not authorize the payment of draw monies on their behalf to anyone else. All repeatedly and unsuccessfully demanded payment from Wolter. Other subcontractors were also not paid. The draw monies were paid to corporate creditors, but not necessarily for the Granville Road project. No further draws were made after July 14, 1976 because construction work ceased. At the time of trial $80,000 remained in the draw account at Heritage. The cost of completion of the project is estimated to be in excess of $200,000.

On January 6, 1977 a criminal complaint was filed charging the defendant with ten counts of theft by contractor. After a waiver of the preliminary examination, an information charging one count of theft by contractor was filed. Wolter entered a plea of not guilty. At the conclusion of the trial, the jury found Wolter guilty as charged. It found the value of the stolen property to be $65,200.

Applicability of sec. 943.20(1)(b)

Sec. 289.02(5) is a criminal statute, ¹ creating the crime of theft by contractor punishable under the provisions of sec. 943.20, Stats. ² Sec. 289.02(5), Stats., also creates civil liability. ³ The two statutes are In pari materia and should be read and harmonized where it is possible to do so. ⁴ It is the duty of the court to construe these statutes, making both operative. ⁵

Aside from the differing burdens of proof in the civil and criminal actions for theft by contract, the only difference between them is the additional element of wrongful intent required in the criminal action. ⁶

Wolter argues that since he is an owner/prime contractor, sec. 943.20(1)(b), Stats., is inapplicable to him. He asserts that as the owner described in that section of the statute he cannot steal from himself. He concludes that the only remedy against an owner/prime contractor is the civil remedy under sec. 289.02(5), Stats.

The failure of this argument is that sec. 289.02(5), Stats. not sec. 943.20, Stats., creates the crime of theft by contract. Sec. 943.20, Stats., is only the conduit through which the crime of theft by contract becomes operative in criminal proceeding pursuant to sec. 289.02(5), Stats. These statutes must be harmonized. ⁷

Mortgage money was given by Heritage to Wolter, as prime contractor and president of Warjo, only for improvements to the Granville land to pay for labor and materials until all claims were paid. The trial record unequivocally demonstrates that the Heritage mortgage money was used for other corporate purposes, such as office rent, utilities, salaries, interest due on other corporate obligations and real estate taxes on other corporate properties. The jury found...