Source: http://masscases.com/cases/sjc/400/400mass737.html
Timestamp: 2019-04-25 22:30:09+00:00

Document:
COMPLAINTS received and sworn to in the Springfield Division of the District Court Department on January 21, 1986.
Motions to dismiss were heard by George Bregianes, J., on statements of agreed facts.
Harry P. Carroll, Deputy City Solicitor (Richard T. Egan, City Solicitor, & John A. Rasmussen with him) for the Commonwealth.
James M. Smith for the defendants.
O'CONNOR, J. This case requires us to consider the circumstances in which a close corporation may be criminally liable for the criminal acts of its employee. Here, the defendant corporations, which we assume to be close corporations, as explained below, are charged in the District Court with violating G. L. c. 138, Section 34 (1984 ed.), which provides in material part that "[w]hoever makes a sale or delivery of any alcoholic beverages or alcohol to any person under twenty-one years of age . . . shall be punished by a fine of not more than one thousand dollars or by imprisonment for not more than six months, or both."
The defendant, L. A. L. Corporation, doing business as The Ranch House, filed a motion to dismiss the complaint against it and an affidavit and a memorandum in support thereof. When that motion was heard, the parties orally agreed, apparently with the District Court judge's approval, that L. A. L. Corporation's motion would apply to the complaints against all the defendants. The motion was denied at first, but, after the parties filed statements of agreed fact, it was allowed as to all the defendants. The Commonwealth appealed, and we transferred the case to this court on our own motion. We reverse, and remand the case to the District Court.
to join in the affidavit procedure [described in Commonwealth v. Brandano, 359 Mass. 332 , 337 (1971)] or in a stipulation of the facts. A pretrial order or judgment of dismissal for the claimed insufficiency of the Commonwealth's evidence cannot be sustained in any case where the Commonwealth fail[s] or refuse[s] to stipulate that the appellate record contains a statement of all the Commonwealth's contemplated evidence." (Footnote omitted.) Rosenberg v. Commonwealth, 372 Mass. 59 , 63 (1977). Commonwealth v. Hare, 361 Mass. 263 , 270 (1972) ("Nothing we hold today prevents the parties from testing the sufficiency of the evidence by stipulation or by some other proceeding, agreeable to the parties, which avoids a long and costly trial"). But here it is apparent that the parties have attempted to make use of the procedure contemplated by rule 13 (c) (2) and those cases, and we think they have done so satisfactorily. Therefore, although the parties have not expressly agreed that the "appellate record contains . . . all the Commonwealth's contemplated evidence," we consider that agreement to be implicit, and we take up the substantive issue presented.
The statements of agreed fact provide that the defendants are licensed to sell alcoholic beverages; that on specified dates a minor purchased an alcoholic beverage from a bartender employed by each defendant at its licensed premises; that none of the minors was asked for identification; and that in each instance the sale by the bartender violated G. L. c. 138, Section 34.
however. If the agreed facts are insufficient to warrant a conviction of a close corporation, as the defendants argue, then L. A. L. Corporation and the other defendants are entitled to acquittal because the Commonwealth has failed to show that they are other than close corporations. The burden is on the Commonwealth to prove all the essential elements of the crimes charged. We conclude, however, that whether the defendant corporations are close corporations makes no difference, and that convictions are warranted on the facts set forth in the agreed statements.
The root of the dispute between the Commonwealth and the defendants is their difference of opinion concerning the reach of Commonwealth v. Beneficial Fin. Co., 360 Mass. 188 (1971), cert. denied sub nom. Farrell v. Massachusetts, 407 U.S. 910, and sub nom. Beneficial Fin. Co. v. Massachusetts, 407 U.S. 914 (1972). The defendants argue that the principles announced in that case apply only to "endocratic" corporations, that is, to "large, publicly-held corporation[s], whose stock is scattered in small fractions among thousands of stockholders." Commonwealth v. Beneficial Fin. Co., supra at 276 n.58, quoting Note, Increasing Community Control Over Corporate Crime -- A Problem in the Law of Sanctions, 71 Yale L. J. 280, 281 n.3 (1961). On the other hand, the Commonwealth contends that the principles announced in Beneficial Fin. Co. apply to all corporations including close corporations. We agree with the Commonwealth.
In Beneficial Fin. Co., after concluding that the evidence was sufficient to establish that certain employees of the defendant corporations were parties to a conspiracy to bribe public officials, the court turned to the question whether there was sufficient evidence to support findings that the corporations were also parties to the conspiracy. In that regard, the court discussed "the applicable legal standards concerning the extent to which a corporation may be held criminally responsible for the acts of its directors, officers and agents." Id. at 253. Although the defendant corporations in that case were indeed endocratic, the discussion clearly was not limited to such corporations.
enough power, duty, responsibility and authority to act for and in behalf of the corporation to handle the particular business or operation or project of the corporation in which he was engaged at the time that he committed the criminal act with power of decision as to what he would or would not do while acting for the corporation, and that he was acting for and in behalf of the corporation in the accomplishment of that particular business or operation or project, and that he committed a criminal act while so acting . . . . Now, this test doesn't depend upon the power, duty, the responsibility, or the authority which the individual has with reference to the entire corporation business. The test should be applied to his position with relation to the particular operation or project in which he is serving the corporation." (Emphasis in original.) Id. at 255-257.
We noted in Beneficial Fin. Co. that the judge's instructions had "focus[ed] on the authority of the corporate agent in relation to the particular corporate business in which the agent was engaged" (emphasis in original), while "[t]he Code seems to require that there be authorization or reckless inaction by a corporate representative having some relation to framing corporate policy, or one `having duties of such responsibility that his conduct may fairly be assumed to represent the policy of the corporation.'" Id. at 257. Also, we observed that "the judge's standard [was] somewhat similar to the traditional common law rule of respondeat superior" with the "added" requirement that "the conduct for which the corporation is being held accountable be performed on behalf of the corporation"(emphasis in original). Id. at 258, 273. See Wang Laboratories, Inc. v. Business Incentives, Inc., 398 Mass. 854 , 859 (1986) ("conduct of an agent is within the scope of employment if it is of the kind he is employed to perform . . .; if it occurs substantially within the authorizedF time and space limits . . .; and if it is motivated, at least in part, by a purpose to serve the employer" [citations omitted]).
that for more serious offenses guilt is personal and not vicarious," but we concluded that "the very nature of a corporation as a `person' before the law renders it impossible to equate the imposition of vicarious liability on a human principal with the imposition of vicarious liability on a corporate principal. `A corporation can only act through its agents . . . . [C]orporate criminal liability is necessarily vicarious.' Note, Criminal Liability of Corporations for Acts of Their Agents, 60 Harv. L. Rev. 283 ." Id. at 263-264.
responsibility of corporations for the criminal acts and, where relevant, the criminal intentions of employees. It is true that the Beneficial Fin. Co. case involved only endocratic corporations, and it is also true that the opinion contains language to the effect that the Model Penal Code rule is ineffective to deal with endocratic corporations, and that the respondeat superior rule is especially well suited to such cases, but that is not to say that the rule is or should be so limited. Furthermore, no sound reason has been advanced for prescribing the Model Penal Code rule in cases involving close corporations, and a "somewhat more flexible standard," see Beneficial Fin. Co. at 255, in cases involving endocratic corporations. On the contrary, sound public policy is served by a rule providing for the criminal liability of any corporation for criminal conduct, performed for its benefit, by its agent authorized to act for the corporation in relation to the particular sphere of corporate business in which the agent was engaged when the criminal conduct took place. We conclude, therefore, that the evidence in this case, in the form of statements of agreed fact, was sufficient to warrant guilty findings against the defendants. The individual bartenders could be found to have been engaged in the sphere of corporate business they were authorized to conduct and to have been acting for the benefit of their employers when they sold alcoholic beverages to minors. Accordingly, we remand this case to the District Court for further proceedings consistent with this opinion.
[Note 1] Doing business as The Ranch House.
[Note 2] Regal Beagle Lounge, Inc., R & M Lounge of Springfield, Inc. (d/b/a Henry VIII), L. W. W. Co., Inc. (d/b/a Bonnie & Clyde).
[Note 3] All the more so, such juxtaposition justifies the same standard for a crime not requiring criminal intent (malum prohibitum). In Beneficial Fin. Co., the defendants argued, although incorrectly, that the cases in other jurisdictions applying a respondeat superior theory of criminal liability to corporations were cases in which intent was not an element of the crime.

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