Hon. H. E. Wassell 

Director 

Agent’s, License and 

Investigation 

Board of Insurance 

Commissioners 

Austin, Texas 

Dear Sir: 

Opinion No. O-2135 

Re : Whether facts set forth constitute 

violation of theft, theft by bailee, or 

embezzlement statutes. 

This is to acknowledge your request for our opinion 

whether under a state of facts submitted by you, a criminal 

prosecution may be maintained as a violation of Article 1410, 

Penal Code, defining theft; or Artiole 1534, defining embesslement j or Article 1429, defining.conversion by bailee. 

-We take the liberty to restate the fact,s submitted by 

you, substituting for the names ,used: 

“A Texas life insurance company on June 19, 1926, had 

as its president, one P, with S as secretary and A as one 

of its insurance agents. 

1936. 

A’s nephew, N, died on May 23, 

Soon.thereafter P laid a scheme with A whereby A 

was to make ap lication with the above company for a policy 

in the sum of B l,OOC.OO payable to himself, A, and predate 

the application and the company would re-date the policy 

and issue it. This was done on June 1 ii , 1936, and the policy was on that. date issued by P’ and S, both signing same 

as president and~secretary respectively in the presence of 

.A, the agent and beneficiary. The application was signed 

‘N, applicant, by A, agent I and the application was predated as of February~ 20, 1436 0 

On June 18, 1936, the proof of death was executed by 

the beneficiary and claimant and on June 19th a check in 

the sum of $l,OoO.CO was issued to the beneficiary, A, and 

ii 

aid the same “day. Immediately after B received the 

l,OOO.OO he gave the money to,S in the presence of P, all 

in keeping with the exact scheme. 

“The $l,OOO.OO was paid out of the mortuary fund. This 

scheme was laid in this manner so that the State Insu.rance 

Department would find ally the papers in order in checking 

claims against that fund, which, unde.r the law is for payment of bona fide claims only under the company’s bona fide 

policies. 
- . 

Hon. H. E. Wassell, page 2 (o-2135) 

"The president and secretary, of course, were authorized to pay out of the mortuary fund legitimate claims, 

and this $l,OOO.OO was paid out of that fund to the authorized agent of the company. The said agent then gave the 

money to the above official, with whom the agent did not 

have a fiduciary relationship as individual, and the said 

officials appropriated same to their own use." 

The whole purpose and intent of the scheme outlined by 

you was to fraudulently take $l,OOO.OO from the mortuary fund 

with the intent to appropriate it to the use and benefit of the 

taker, or those acting together with him. The method of obtaining the money from the mortuary fund was to issue a pre-dated 

policy on the life of a person then dead, and on proof of death, 

to unlawfully take the money from said fund. 

We quote the several articles of the Penal Code you referred to: 

NIArticle 1410. 'Theft' defined. 

"'Theft' is the fraudulent taking of corporeal personal 

property belonging to another from his possession, or from 

the possession of some person holding the same for him, without his consent, with intent to deprive the owner of the 

value of the same, and to appropriate it to the use or benefit of the person taking." 

e,Qticle 1534, Embezzlemegf;. 

"If any officer, agent, clerk, employe, or attorney at 

law or in fact, of any incorporated company or institution, 

or any clerk, agent, attorney at law or in fact, servant or 

employe of any private person, copartnership or joint stock 

association, or any consignee or bailee of money or property, 

shall embezzle, fraudulently misapply or convert to his own 

use, without the consent of his principal or employer, any 

money or proper~ty of such principal or employer which may 

have come into his possession or be under his care by virtue 

of such office, agency OT employment, he shall be punished 

in the same manner as if he had committed a theft of such 

money or property." 

"Article 1429. Conversion bv a bailee. 

'IAny person having possession of personal property of 

another by virtue of a contract of hiring or borrowing, or 

other bailment, who shall without the consent of the owner, 

fraudulently convert such property to his own use with intent to deprive the owner of the value of the same, shall 

be guilty of theft, and shall be punished as for theft of 

like property." 
Hon. H. E. Wassell, page 3 (o-2135) 

In connection with Article 1410,~~supra, we, direct your 

attention to the language of Article 1413: 

“The taking must be-wrongful, so that if the property 

came into the possession of the person accused of theft by 

lawful means, the subsequent ,appropriation of it is not 

the~ft but if the taking, though’ originally lawful., was obthe owner of the value ther$of; and appropriate the 

taineb by any ~false pretext or with any intent to d;ep;;ve 

- 

erty to the use and benefit of the, person taking, and the 

same is so appropriated, ,the off,ense of theft is com@ete.‘V 

Thus, we note three distinct. and’ possible crimes, i.e., 

theft, embezzlement and theft bjr bailee. Article 1413, usually 

denominated theft by false pretext, is to be considered along 

with hrticle 1410, supra, and if the offense comes within either 

article, it is nevertheless theft, the indictment being the same. 

Taylor v. .State, 25 ‘Tex.Cr.R. ~96 7 S.?i. 861; Riggs v. State, 

125' Tex.Cr .R. 647, 70 S.W. (2d) lb4. Many cases and textwriters 

recognize the difficulty of making a proper practical application of the theoretica,l distincti.ons between these related off enses. Texas Jurisprudence says: “As a matter. of fact) i.t is 

apparent that the embezzlement, theft, swindling an-l other stntutes denouncing related offenses,over?ap each other to a ccnsiderable extent.” (16 Tex.Jur. 329). 

.The money in the mortuary. fund was the property of the 

insurance company. The wrongful, taking .in any off::iize may prop- 

‘erly be. charged by any allegation in the indictment to have been 

from the company. See Modica v. State, 94 .Tex.Cr.A. .4C3 251 

S.W. 1049; Osborne v. State, 93 Tex.Cr.R. 54 245 S.W. 938; 

Houghton v . State, 116 Tex.Cr.R. 70, 32 s.w.t2d) 837; Sauls v. 

State, 131.Tex.C..R. 180, 97 S.W.(2d) 195, and many others. 

We first conclude that theft by bailee or conversion 

as denounced by Arti.cle 1429, supra, does not apply in this case. 

It has been said. that for an offense to come within the purview 

of this statute, the fraudulent intent arises subsequent to obtaining the property. See Price v. State, .49 Tex.Cr.R. 131, 91 

S.W. 571. Whil~e the Price case. was overruled on this point in 

Uvarez v. State, 109 Tex.Cr.R. 62, 2 SiW.(2d) 849, thclatter 

case is authority that there must be a distinct bailment of hiring, borrowing or other bailment,. By “other bailment” the court 

says is ‘meant: “that personal property, whose title is to remain in the owner, is delivered to another for some purpose, with 

the understanding, express or implied,: that the acceptance by 

such other is for the. carrying out of :such purpose.” In the instant case,, the fraudulent intent i-s evident from the inception 

of the scheme;. and prior ,to the removal of the money from the 

mortuary funds. owe, are, unable,~to p~erceive ~a bailment, as that 
Hon. H. E. Wassell, page 4 (O-2135) 

has been defined by the courts. We quote the language of Judge 

Lattimore in the case of Brown v. State, 99 Tex.Cr.R. 441, 270 

S.W. 179: 

“The relation of bailee as involved in our statute on 

theft by bailee is constituted where one obtains the property of another with the intent to use it for his own benefit and then to return it (or its equivalent in value) .I1 

(Parenthetical insertion ours.1 

In determining whether the case is one of embezzlement 

or theft, we encounter greater difficulty. Various distinctions 

have been drawn and the authorities are not uniform. We have 

read many cases, but do not find any case, either in Texas or 

other jurisdictions, covering an exact fact situation to the one 

now under oonsiderat ion. 

We note the following excerpts from Texas Jurisprudence: 

“While embezzlement is akin to larceny or theft, the 

offenses are distinct, and a conviction for one cannot be 

had under an indictment for the other. But the same act 

may constitute both theft and embezzlement, or both theft 

under Article 1413 of the .Penal Code and conversion by 

bailee; and the fact that, .under the evidence, the defendant might have been prosecuted and convicted of oneof them 

does not prevent his prosecution end conviction of the 

other, . . , Ordinarily, to constitu.te, theft the fraudulent intent, which is an essential element of both theft 

and embezzlement, must ‘exist when the property is taken, 

while in embezzlement or conversion by a bailee, the intent may be formed after possession of the property has 

been obtained, . . .I! (See 41 Tex.Jur. 17, et seq., ix 

10, 11; 16 Tex.Jur. 32V;et seq., i 7,8,10. Brown v. -State, 

VV Tex.Cr.B. 441, 270 S.W. 179; Connor v. State, 135’ Tex. 

Cr.R,. 429, 111 S.W. (2d) 723; Landis v. State, 85 Tex.Cr.R. 

381, 214 S.W. 827.) 

In considering the proper charge in the case before us, 

we think the provisions of particle 4747, Revised Civil Statutes, 

to be most pertinent: 

‘IAny dfrectar, member of a committee, an officer, or 

any clerk of a home company, who is charged with the duty 

of handling~ OS: investing its funds, shall not deposit or 

invest such %nds, except in the corporate name of such company; shall not borrow the funds of such company; shall not 

be interested in any way ,in any loan, pledge, security or 

property of such company, except as stookholderj shall not 

take or receive to his own use any fee, brokerage, commission, gift or other consideration for, or on account of, a 
- 

Hon. R. E. Wassell, page 5 (o-2135) 

loan made by or on behalf of such company." 

From the above statute, it appears doubtful whether 

such a fiduciary relationship is existent as is essential under 

the construction placed by our courts to constitute embezzlement. 

In this connection, we point out that the money was really taken 

by A, with the assent and connivance of P and S at their instigation, suggestion and with such actual assistance as to make 

them guilty as principals under the statutes (Arts. 65 to 69 inclusive, Penal Code), and the construction placed thereon by the 

Court of Criminal Appeals. 

230 S.W. 410; Asher v. 

See Smith v. State 89 Tex.Cr.R. 319 

State, 128 Tex.Cr.R. 388, 81 S.W.(2d) 681: 

Smith v. State 

Vol. 1, Vernonis 

102 Tex.Cr.R. 139, 277 S.W. 666; notes on p* 86, 

Annotated Penal Code. 

In our attempted application of the facts to the law, 

we have reached the conclusion that a successful prosecution may 

be carried on for theft under the provisions of Articles 1410 and 

1413 of the Penal Code. 

In the recent case of Lovine v. State, 136 Tex.Cr.R. 

32, 122 S.W. (2d) 1069, the following quotation from 17 Ruling 

Case Law 13 is given approval: 

"If a person with a preconceived design to appropriate 

property to his own use, obtains possession of it by means 

of fraud or trickery, the taking under such circumstances 

amounts to larceny, because in such cases the fraud vitiates the transaction, and the owner is still deemed to retain a constructive possession of the property, and the 

conversion of it is a sufficient trespass, or, as is sometimes said, the fraud or trick practiced on the owner is 

equivalent to a trespass." 

As we view it, a constructive theft may be shown under 

the authority of De Blanc v. 

1024; Contreras v. State, 

State, 118 Tex.Cr.R. 628 37 S.W.(2d) 

1.18 Tex.Cr.R. 626, 39 S.W.(?'d) 62; 

Sherman v. State, 124 Tex.Cr.R. 273 62 S.W.(2d) 146; Conner v. 

State, ;33 Tex.Cr.R. 

127 Tex.Cr.R. 552, 

429, 111 S.W.(zd) 723; Davenport v. State, 

78 S.W.(2d) 605; and that the details of the 

scheme would be admissible to show the fraudulent intent at the 

time of the taking. 

APPROVED JUN 19, ii940 

Js/ Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

APPROVED: OPINION COMMITTEE 

BY: BWB, CHAIRMAN 

BW:GOtwb 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

By /s/ Benjamin Woodall 

Benjamin Woodall, Assistant